{"id":1601,"date":"2020-10-18T16:32:19","date_gmt":"2020-10-18T12:32:19","guid":{"rendered":"https:\/\/moneymall.ae\/credit-blog\/?p=1601"},"modified":"2020-10-18T16:33:00","modified_gmt":"2020-10-18T12:33:00","slug":"credit-card-settlement","status":"publish","type":"post","link":"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/","title":{"rendered":"What is Credit Card Settlement?\u00a0"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">If you are trying to free yourself from the burden of credit card debt, you\u2019ve got a number of options available. If you lack the means to pay the debt fully over a reasonable period of time but you are unable or unwilling to file bankruptcy, debt settlement could be an option. <\/span><\/p>\n<h1><span class=\"ez-toc-section\" id=\"Heres_all_that_you_need_to_know_about_credit_card_settlement%E2%80%A6\"><\/span><span style=\"font-weight: 400;\">Here\u2019s all that you need to know about credit card settlement&#8230;<\/span><span class=\"ez-toc-section-end\"><\/span><\/h1>\n<figure id=\"attachment_1609\" aria-describedby=\"caption-attachment-1609\" style=\"width: 1280px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/pexels-artem-beliaikin-929288\/\" rel=\"attachment wp-att-1609\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1609\" src=\"https:\/\/moneymall.ae\/credit-blog\/wp-content\/uploads\/2020\/10\/pexels-artem-beliaikin-929288.jpg\" alt=\"credit card settlement\" width=\"1280\" height=\"853\" \/><\/a><figcaption id=\"caption-attachment-1609\" class=\"wp-caption-text\">credit card settlement<\/figcaption><\/figure>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a23441402659\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a23441402659\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#Heres_all_that_you_need_to_know_about_credit_card_settlement%E2%80%A6\" >Here\u2019s all that you need to know about credit card settlement&#8230;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#How_does_credit_card_debt_settlement_work\" >How does credit card debt settlement work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#What_are_the_pros_of_credit_card_debt_settlement\" >What are the pros of credit card debt settlement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#What_are_the_drawbacks_to_credit_card_debt_settlement\" >What are the drawbacks to credit card debt settlement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#What_are_your_negotiation_options_for_credit_card_debt_settlement\" >What are your negotiation options for credit card debt settlement?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#Lump-Sum_Payment_Agreement\" >Lump-Sum Payment Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#Workout_Agreement\" >Workout Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/moneymall.ae\/credit-blog\/credit-card-settlement\/#Hardship_Payment_Agreement\" >Hardship Payment Agreement<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<h2><span class=\"ez-toc-section\" id=\"How_does_credit_card_debt_settlement_work\"><\/span><b>How does credit card debt settlement work?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Debt settlement involves making a negotiation offer to the credit card company to settle the amount of money you owe for a lesser amount. If the creditor accepts, you will need to pay the entire settlement amount upfront, in one lump sum. A credit card company might accept a settlement if you are very delinquent on your payments. It is often less expensive for a creditor to simply accept a lesser amount in settlement than it is to send the account to collections, file a lawsuit, obtain a judgment, and finally attempt to collect on the judgment.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_pros_of_credit_card_debt_settlement\"><\/span><b>What are the pros of credit card debt settlement?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Given below are a few of the benefits of credit card debt settlement:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">You are paying less overall on your debt during a much shorter period of time. Paying the debt off immediately means paying no more interest, and settling means that you are paying even less than you currently owe.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Debt settlement is not as harmful to your credit as bankruptcy if your credit is not already poor.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_the_drawbacks_to_credit_card_debt_settlement\"><\/span><b>What are the drawbacks to credit card debt settlement?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Credit card debt settlement has a number of benefits. On the other hand, it also has multiple drawbacks. Some of them are as follows:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Debt settlement is risky: If you stop making your credit card payments in an attempt to save up enough money to offer a settlement, your credit card company can sue you, obtain a judgment, and garnish your wages and bank accounts. Even if you notify the creditor of your intent to settle, absolutely nothing legally stops the creditor from collecting.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Using a debt settlement company is even riskier: Many of these companies will advise you to default on your credit card payments and pay the money to them instead. After taking a monthly fee, they\u2019ll put the rest of your payments into an account to accumulate a lump sum that\u2019s large enough to offer the credit card company. Today, there are hundreds of fraudulent debt settlement companies, and it can, thus, be very easy to get pulled in by a debt settlement scam.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Debt settlement creates income tax liability: When your credit card company forgives any amount of the debt, the IRS and your state government will see the debt forgiveness as income to you. The difference between your original balance and the settlement amount is taxable income, and you will have to pay taxes on it unless you qualify for an exception or exclusion.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_are_your_negotiation_options_for_credit_card_debt_settlement\"><\/span><b>What are your negotiation options for credit card debt settlement?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Before you negotiate with a credit card company on your own, you should try and get familiar with the types of settlement options that are usually available to consumers. If the credit card company is willing to look at the idea of a debt settlement, then there is a high chance that they will want to make one of the following arrangements:<\/span><\/p>\n<ul>\n<li>\n<h2><span class=\"ez-toc-section\" id=\"Lump-Sum_Payment_Agreement\"><\/span><b>Lump-Sum Payment Agreement<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In this case, you negotiate with a credit card company to pay a sum of money that is less than what you owe. Of course, this option only works if you have enough cash available to make such a payment. If you receive a bonus at work, or an inheritance, or are willing to raid your savings, you can use them to offer a one-time payment and in return, get forgiveness of the entire remaining balance.\u00a0<\/span><\/p>\n<ul>\n<li>\n<h2><span class=\"ez-toc-section\" id=\"Workout_Agreement\"><\/span><b>Workout Agreement<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">For this option, the credit card company should be willing to lower your interest rate, waive or at least reduce the minimum monthly payment, or remove late fees in an agreed-upon plan. This option can often help you reduce your overall debt and, thereby, help you pay it off in a shorter period of time.<\/span><\/p>\n<ul>\n<li>\n<h2><span class=\"ez-toc-section\" id=\"Hardship_Payment_Agreement\"><\/span><b>Hardship Payment Agreement<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This could be a good option for you if the reason you are having trouble paying credit card debt is due to an illness, a job loss, a natural disaster, or another temporary hardship. You may be able to arrange for lower minimum payments, interest rates, and fees. You may also be able to suspend payments without penalty for a limited period of time.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Generally, a majority of people are able to work out settlements with their credit card companies even without getting assistance. But if you do require help handling the negotiations, you can always consider hiring a debt settlement lawyer.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you are trying to free yourself from the burden of credit card debt, you\u2019ve got a number of options [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1602,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[2,38],"tags":[66,417,419,418],"class_list":["post-1601","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-credit-cards","category-how-to","tag-credit-card-debt","tag-credit-card-settlement","tag-settle-credit-card","tag-settle-credit-card-debt-uae"],"_links":{"self":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts\/1601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/comments?post=1601"}],"version-history":[{"count":4,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts\/1601\/revisions"}],"predecessor-version":[{"id":1611,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/posts\/1601\/revisions\/1611"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/media\/1602"}],"wp:attachment":[{"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/media?parent=1601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/categories?post=1601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneymall.ae\/credit-blog\/wp-json\/wp\/v2\/tags?post=1601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}