http://www.primedebtmanagement.com/debt-settlement/n62.html Credit card debt settlement plans will negotiate your balances down to settle on between 40% and 60% of the money owed. The most aggressive debt reduction plan, credit card debt settlement and take years off your debts. en-us Sat, 26 Jul 2008 15:00:00 EDT Sat, 26 Jul 2008 15:00:00 EDT Weblog Editor 2.0 Credit card debt settlement is a form of debt settlement where a third party company works with you to achieve credit card debt reduction. You make monthly payments to the debt settlement company instead of the credit card company, and that money is used by the settlement company to offer your creditors a settlement where they accept a lesser amount than owed to reach a credit card debt settlement. Why does Debt Settlement Work? Once you enter a credit card debt settlement program, your accounts will start to go into arrears. After several missed payments, the credit card company concludes that you are unlikely to pay and sends your account to a collections division or company. As publicly traded companies, they need to mark down uncollectible accounts, so given the choice between calling a 50% loss and a 100% loss, the company will often agree to eliminate credit card debt by accepting a settlement, rather than failing to collect anything. Can't I simply Negotiate on my own? You can, but the debt settlement companies have several advantages over you: They aren't emotionally involved in the matter, so less susceptible to being bullied. When the creditor is working with a debt settlement company, they know that you aren't going to pay them, because your money is held by the settlement company. Successful settlement companies may have pre-negotiated deals with major creditors, which can get results quickly. Most people hate negotiating and aren't good at it, making a third party helpful. Is this the best solution? It depends on your financial situation. Debt settlement is often the cheapest on a monthly basis, and saves the most money on the debts. On the other hand, debt settlement often has the most adverse affect on your credit score. If you aren't planning to borrow money for a few years, then the lower credit score is a small price to pay to save substantial amounts of money. However, if you plan to buy a house in the next four years (or even seven years), the money you save on debt settlement, as opposed to credit card debt consolidation or other options may be less substantial than the higher interest rates. Look at your level of credit card debt, and conclude if saving 40% - 60% on that would be worth a lower credit score for years. If so, then debt settlement may be your cheapest option, otherwise, credit counseling or other forms of debt management may be better. Sat, 26 Jul 2008 15:00:00 EDT