Getting rid of your credit card debts can give you much relief and restore your peace of mind, especially if you had been struggling to cope with the outstanding bills for long. Since credit card debts multiply with time, settlement might seem to be a beneficial debt relief option as it can help to reduce the debt amount to a large extent.
Below are some simple signs mentioned to let you know that you badly need credit card help to cure your debt problems.
Credit card debt settlement program usually works in the same way as debt settlement programs do. Once you approach a trustworthy credit card settlement company, they handle the entire credit card debt elimination process on your behalf. Click here to know how debt settlement programs work.
Read below to know the 5 possible benefits of getting legal help to settle credit card debt:
It is likely that credit card settlement will have a negative effect on your credit score as your creditor is compromising a huge amount in the program. The creditor reports the said amount as a loss. Again, the negative marks left on your credit report often remain there for up to seven years and include any past due payments, charge offs, accounts being sent to collections and judgements. However, in comparison to your overwhelming and all-encompassing debt burden, this is a very small compromise. Moreover, in comparison to bankruptcy, the credit impact is much less in a credit card debt reduction program. If you file for bankruptcy in order to get out of debt, you'd literally ruin your credit report and the mark will stay there for 10 years.
Commencing from 2010, the IRS considers any forgiven debt amount that is more than $600 as taxable income. Therefore, the creditor must send you IRS Form 1099-C (Cancellation of Debt), and at the end of the financial year, you must pay income tax on the forgiven debt, just as you do on other forms of income. However, if you are technically bankrupt, then filing IRS form 982 may exempt you from paying taxes on the savings that you had from the settlement.