Credit Card Debt
Credit Card Debt Resolution
We refer to the process of compromising credit card debt as “Debt Resolution.” The financial crisis has witnessed an on slot of “Debt Settlement” companies that seek to assist people in settling out their credit card obligations at a discount. Before addressing some of our misgivings as to the business practices of these Debt Settlement companies, let’s explore our approach to Debt Resolution.
First and foremost, you must recognize that the credit card companies will not discount or assist you if you’re paying the cards current. The collateral consequence here is that you must stop paying on the cards in order to derive the best discount. This means, if you’re overly concerned with your credit score you’re going to have a difficult time taking advantage of the terrific results that can be achieved using Debt Resolution as a tool for financial crisis management. Shedding debt is the key to this outcome and, in our view, when properly evaluated, can outweigh the cost of seeing your credit score dip for a couple year period.
Before going too far, let’s discuss the basics of when Debt Resolution is a good idea. The best case scenario is someone with substantial credit card debt, who still has regular income such that we can facilitate settlement of the card balances by saving the money that was being paid to service the monthly payments on the cards. Even better is the situation where that same person has, for one reason or another, already let his credit slip such that his or her credit score is low – which in my view is a rating of less than 600. We often times adopt this strategy on clients who are seeking a loan modification, short sale or deed in lieu of foreclosure on their house (“not home”) or other property. The reason is that this is a person who we are attempting to shed debt and preserve future income without utilizing a bankruptcy filing. Keep in mind, though we think bankruptcy is a great solution when you can pass the “means test” and discharge debt, the current law does not always cooperate. Fortunately, Debt Resolution can facilitate reaching the designated goal.
For more information, or to setup a free case evaluation, call one of our attorneys today!