How To Get Out Of Credit Card Default

As the economy continues to lag, more and more people are finding themselves facing difficulty when it comes to paying their bills on time. If you are struggling with excessive credit card debt, you may be wondering what the consequences might be. In truth, the consequences of credit card default depend largely on how you deal with the situation.

If you ignore the situation and hope that it goes away, this may actually happen. In truth, unlike medical debt collectors, credit card companies do not always sue you when you default on an account with them. They will first look at the situation and see if they think that they actually have a shot at recovering the funds from you if they do sue. In truth, litigation is costly, and sometimes the cost and risk associated with it out weight the potential gain. If your balance is very small or if you do not have stable employment, chances are they will forgo a lawsuit.

If they do sue and you legitimately owe the money, the creditor will most likely get a judgment against you. They will then seek a wage garnishment which will give them a right to get money from your employer each month prior to you being paid. The amount that they can get will vary by state and your individual circumstances, but rest assured that it will be far more than you are comfortable with.

A must better solution is to try to settle the debt if you think that the creditor is posturing for a lawsuit. Credit card debt settlement is where you negotiate directly with the creditor for them to accept less than the full balance that you owe them. The amount that you will be able to negotiate the account down to will depend on several factors, like the creditor’s individual policies and how likely they believe that you are actually to file for bankruptcy. However, generally speaking, you can expect to be able to settle an account for 40% to 60% of what you owe. Done properly, it can eliminate any further obligation that you have to the company. There are companies that you can pay to negotiate on your behalf, but you will want to be very careful when choosing a company to work with. There are certainly legitimate companies out there, but there are also ones who will charge huge fees upfront and then fail to get any results at all for you.