31st Oct 2009 by Joseph Pousada
Credit card debt is typically unsecured debt. If the debt is not paid, within time they can pursue legal action and obtain a judgment against you. Legal action against you might include wage garnishment of your income, seizing of assets in bank accounts, a lean against property you own etc… If you are experiencing cash flow issues due to employment termination or other life events you might want to do research to find a reputable debt management company. Depending on the severity of your situation you may wish to do a consolidated payment where they negotiate the interest on your debt and come up with a payment plan for a fixed number of years. Typically you pay them once a month and they will make payments on your behalf to the different creditors. This can affect your credit score but will read on your credit report as “paid in full” once the creditor has received all payments agreed upon in the plan. If your situation is more severe you may wish to pursue a program in which you settle your debt for less than the amount due. Typically you make monthly payments in this type of program and they will disperse the payment to any creditors that accept the settlement they negotiate on your behalf. The creditors are not obligated to accept a consolidation plan or a settlement and may pursue legal action against you regardless of your participation in any debt program. In addition, the settlement plan will affect your credit score significantly and will read “settled”. Any amount deducted may have tax implications as well and you should consult your tax advisor as well.
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