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Credit card debts can be forgiven, but there are drawbacks

Many South Carolina residents have overwhelming credit card debt that they hope to get rid of. Scam artists have found ways to take advantage of these people by getting them to apply for fake debt forgiveness programs. Even if a debtor is offered a real debt settlement offer from a creditor, these programs can have drawbacks.

Credit card issuers sometimes offer to settle with a borrower if they fear that the borrower is about to apply for bankruptcy. In a debt settlement, a credit card company might forgive a large debt after the debtor pays off a fraction of the debt. While a settlement could save a debtor some money, settlements are usually not offered to debtors until a debt is extremely overdue.

By the time a credit card company sends a debt settlement offer, the debtor's credit score is likely to have taken some big hits due to the delinquent payments. When debtors skip credit card payments, they could also face a lawsuit from the credit card company before they can settle. A lawsuit and a subsequent debt settlement will both be reported to the credit bureaus and cause a debtor's credit score to drop even further.

People who cannot afford to pay back all of their credit card debt may want to talk to an attorney about whether they should pursue a settlement or file for bankruptcy. In many cases, filing for bankruptcy can be a better option than settling with a credit card company because it can eliminate debts entirely. The bankruptcy process is also quicker than the debt settlement process, and eliminating debts through bankruptcy does not trigger a tax bill.

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The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
Suite 201
Columbia, SC 29201

Phone: 803-764-1558
Fax: 803-764-1563
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Columbia Office

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925-D Wappoo Road
Charleston, SC 29407

Phone: 843-509-0039
Fax: 866-481-2325
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