Many Texas residents struggle to pay their monthly credit card bills. As part of the agreement to obtain credit, cardholders sign documents agreeing to pay all the debts that they owe to the credit card company plus interest. When these debts aren't paid on time, many credit card companies realize that referring the matter to attorneys or collection agencies simply isn't worth it.
Some debtors who can't afford their bills choose to negotiate a settlement with the credit card company. A settlement lump sum payment is typically for around 50 to 80 percent of the total amount owed. It is a good idea for anyone who chooses to take care of their bill this way to get the offer in writing before sending a payment.
There are companies that offer to help consumers settle their debts by negotiating with credit card companies. Debtors should watch out for companies that ask for payment before they have successfully negotiated a settlement since this practice is forbidden by the Federal Trade Commission. There are several downsides to using these services, such as high fees, worse credit scores and surprises taxes owed on the amount of debt that was forgiven.
Debtors who cannot repay their debts may consider filing for bankruptcy. This is often the best option for those who have more than one type of debt that they cannot afford. Many debtors who try to settle their debts may still end up needing to file for bankruptcy.
A bankruptcy lawyer could help a debtor who is weighing their options decide if bankruptcy is the right move. It's important to note that the debtor's income may affect which type of bankruptcy options are available.