Some New York consumers who are struggling with credit card debt might be considering a debt settlement arrangement. There are advantages and disadvantages to this as a solution.
Debt settlement sums usually are around 50 to 80 percent of the total balance that a person owes. People who do go the debt settlement route can negotiate the settlement themselves with the issuer or can hire a lawyer to do so. They should also get a copy of the settlement offer in writing. There are debt settlement companies that can assist with negotiations, but not all of them are entirely honest. Pitfalls people should watch out for are companies that insist that their services are needed to negotiate a debt settlement, those that tell the customer to stop communicating with the credit card company entirely and those that demand a payment in advance. Debt settlement companies also cannot guarantee an outcome such as no more contact from the credit card company.
There are additional disadvantages to debt a settlement. There may be taxes on the amount that is forgiven. There may also be high fees, and a settlement could worsen a person's credit. There may be other alternatives including a debt management program, a hardship program, working with a credit counselor and declaring bankruptcy.
Some people may be reluctant to file for bankruptcy because they fear doing so is irresponsible or will destroy their credit over the long term, but neither of these is true. Bankruptcy can be a responsible way for people to get finances back on track, and credit can be rebuilt after a bankruptcy. Filing for bankruptcy puts an immediate stop to any creditor actions. Bankruptcy can provide a fresh start for those who are struggling with debt.