Things to keep in mind about credit card debt

Arizona residents with a lot of credit card debt may feel overwhelmed by what they owe. However, there are some important things to keep in mind that could cause consumers to breath a sigh of relief. The first thing that all debtors should know is that they will never go to jail for nonpayment of a debt. Although there could be some legal repercussions for missed payments, none of those penalties will ever be time behind bars.

Another thing that debtors may be happy to learn is that some credit card companies are actually willing to work with their card holders. Simply using the telephone to call a credit card company up directly and explain the situation can sometimes lead to a modified payment agreement. Creditors are not obligated to take less than the minimum payment each month, but many will allow a payment reduction if asked directly.

People who have found themselves in a mess of debt may not have to pay off the full balance. By offering to pay a lump sum, a debtor may be able to settle the debt for a fraction of what is owed. Before agreeing to settle a debt for a lump sum, debtors should be fully aware of the tax consequences that could result from such a move, as the amount that is forgiven can be deemed taxable income in some cases.

There are some situations where filing for bankruptcy may be the best solution for a person who is in a lot of credit card debt. If a debtor who is facing overwhelming financial obligations is unsure whether or not to file for bankruptcy, speaking with an attorney may be a good way to gain a better understanding of all of the options that are available.

Source: Credit Cards.com, "8 things you must know about credit card debt ", December 03, 2014

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