Can You Settle Retail Credit Card Debt?

Retail credit cards can create some of the hardest debt to manage. Retail credit cards are often easy to acquire but in many cases come with astronomical interest rates. Because of this, getting behind on retail card payments can quickly lead to a deep hole of unmanageable debt. When your retail debt gets out of control, it can seem like your options are limited. Fortunately, it is possible to settle retail credit card debt.

Debt settlement is when a debtor negotiates an agreement with their creditor to pay off a smaller portion of their total debt. Normally, this only happens when the borrower has defaulted on the account. The creditor may be more likely to agree to a settlement if they feel they would not receive payment for any of the debt owed. However, if you know you are at risk of defaulting, you may be able to discuss settlement options with your creditor. A creditor knows that recouping some of the debt is better than none of the debt. Settlement can be resolved with a lump-sum payment or with a fixed number of payments.

Settling your retail credit card debt may be the right choice for you, but it is important to know the potential consequences of debt settlement. Your credit score will likely be significantly impacted by a settlement. While you are repaying the settled amount, the settlement itself will be seen as a negative mark on your credit report. Even if you close your credit card account, the settlement will impact your credit score for up to seven years. Because of this, it is important to consider all of your options before you opt for debt settlement.

You may also be hit with surprise taxes if the IRS gets involved with your settlement. If the settlement allows more than $600 to be forgiven, you will likely have to pay taxes on the amount forgiven. If this happens, it is possible for you to reduce your tax liability. If your liabilities exceed your assets, you could qualify as insolvent and therefore wouldn’t have to pay as much in taxes. Before you settle, you need to make sure you can afford the potential taxes of settling.

Of course, no one has the right to debt settlement. You have to be able to provide evidence to your creditors that you have a specific hardship or that your debt is unmanageable. Even if you do compile enough evidence to prove you are facing significant financial difficulty, your creditors still may not be willing to negotiate. If your creditors are demanding payment in full, you may be forced to look into other debt management solutions.

While you can certainly attempt to settle retail card debt on your own, it might be in your best interest to work with a reputable debt settlement firm like Veitengruber Law. As a respected New Jersey debt settlement law firm, we have relationships with creditors and know how to negotiate with them. Because retail credit cards are often facilitated by larger credit card or finance companies, an attorney will typically have better luck negotiating than you would on your own. A debt negotiation attorney knows all the ins and outs of the laws surrounding debt and how this will impact your specific situation. This is especially important if you have had legal action taken against you. Even if you’re facing a lawsuit over your retail debt, the right attorney can demystify the settlement process and help you get back on your feet financially.

Veitengruber Law is a full service debt negotiation legal team. We know how overwhelming credit card debt can be, but you don’t have to struggle alone. Our proven debt negotiation solutions can help you work towards eliminating your debts. We can help you decide if debt settlement is the right choice for you and help you explore all of your debt management options.

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