Credit Card Debt
Question
I am overwhelmed in credit card debt and would like to try the debt settlement. A company called Zwicker and Associates has already taken over my Discover card. What can they do to me? Is debt settlement a good idea?
Julianna H.
Answer
Julianna-
Debt settlement is usually a good program for old unpaid collections, charge offs, judgments or tax liens.
Usually, in the cases I just listed, you can get a 40 to 60% reduction in the balance that you owe.
There a few pitfalls to be aware off.
1) The remaining balance that you do not pay on your settlement may be considered income by the IRS and is taxable as ordinary income.
2) Your credit report will be updated as a “settlement for less than full balance” which can be a red flag for future creditors that you may apply for new credit with.
3) Lastly, some settlement companies will take monthly payments from you until you have enough to equal the settlement amount. Be aware that these monthly payments are going to the settlement company and not your creditors. This means that the creditors still have the right to attempt to collect the debt including garnishing your wages, getting a judgment or seizing your assets.
Let us know if we can be of any assistance finding a reputable partner for you.
Candice
Tags: Ask Candice, bad credit, Credit Card, Credit Card Debt, Credit Repair, Debt