Debt Settlement

• The process of debt settlement involves giving the credit card company a lump sum of money. You give the credit card company a certain amount of money and they close out your account for you. With this process, the credit card company actually allows you to pay less than what you owe on the balance. The credit card company will typically only consider doing this if you agree to give them the money in cash immediately instead of offering payments.
  
  

Assistance

• If you want to settle your debts, you do not have to go through the process alone. Many companies exist for the purpose of helping consumers settle credit card debt. These companies talk to the credit card companies for you and negotiate your case. The benefit of using these companies is that they can save you time. The drawback of using these companies is that you have to pay a fee that could be based on a large percentage of the amount that you owe the credit card companies.
  
  

Credit Damage

• One of the potential drawbacks of using a credit card settlement is that you damage your credit history. When you sell your accounts, the credit card companies report this action to the credit bureaus. The credit bureaus lower your credit score because of this action. When it comes to getting additional credit in the future, other creditors will be hesitant to work with you. It may be several years before your credit score returns to the level that it was before the settlement.
  
  

Time Frame

• One of the benefits of debt settlement is that it works fast. With this method, you could potentially be rid of your debt within a very short period of time. For example, once you negotiate a settlement with your credit card company, you make the payment and it can be processed within one or two days. This can completely eliminate your debt much faster than using the traditional route of making payments to your credit card company over several months.