Can I Still Use My Credit Card After Debt Settlement?

Credit card companies are willing to negotiate credit card bill settlements with consumers struggling to make their minimum payments. While credit card companies typically lose money on settlements, they often prefer this option to write off the debt entirely. For consumers, the main advantage of credit card bill settlement is that it can help them get out of debt more quickly. 

In addition, settlements can sometimes lead to a lower interest rate, saving consumers money in the long run. The main downside of credit card bill settlement is that it can damage your credit score. However, if you struggle to pay your credit card bills, settlement is your best option.

What Are The Pros And Cons Of Debt Settlement?

Debt settlement allows you to pay a smaller amount than the total amount borrowed, and it’s usually the last resort if you can’t pay your debt. Financial experts recommend avoiding this option because the downsides of credit card debt settlement can be severe. Other debt relief options you can try first are debt consolidation, debt management, and credit counseling. 

One of the most significant disadvantages of credit card debt settlement is the huge negative impact on your credit score. Debt settlement is typically considered when your payments have been long delayed, and your account has gone into collections. It’s the common option when third-party collection agencies are already collecting your debt. 

At this point, your credit score is already at the bottom. Adding a debt settlement may not aggravate it, but the debt settlement will appear on your record for seven years. This will make it challenging to apply for another credit card or loan. If you do so, you’ll be subjected to higher interest fees. Further, debt settlement destroys your credibility with your current creditors, and they won’t likely allow you to reuse your existing credit line. 

However, this can be a blessing in disguise. Since you’ve settled your debt and paid it off, you now have better control of your money and can begin spending only what you have. You can start building better financial habits without the threat of debt hanging over your head. Your credit score will slowly bounce back as you practice good financial management principles. It’s possible that before the seven years are up, you will regain your good credit score, giving you access to credit lines and credit cards again. 

How To Have A Successful Credit Card Debt Settlement

If you’ve decided to pursue a debt settlement, you must remember the following tips to succeed. 

  1. Debt settlement involves back and forth negotiations. Be prepared with your best negotiation skills and stay patient throughout the process. 
  2. Stash away cash to use as leverage. Debt settlement involves paying a lump sum of 40%-60% of what you owe. You’d be able to negotiate a better deal if you already had cash ready to pay your creditors the moment they agreed to the settlement. 
  3. Keep everything in writing. Keep a copy of the successful credit card settlement report, which clearly outlines the terms of the agreement. This document will help you in case challenges crop up in the future.  
  4. Beware of credit card settlement scams. Many debt settlement companies will offer to take care of the negotiation process for you. Do your research and be careful because some of them are fraudulent. If you are not confident in your negotiation skills, you can always tap the services of credit card debt settlement attorneys who can handle the case for you. 
  5. Be truthful in all your negotiations. Credit card debt is rarely forgiven and settled, but companies may sympathize with your case if you plead your situation truthfully. Never embellish your reasons and be honest in everything. If you are approved for monthly installments, make an effort to pay them off according to schedule. Avoid being late as it can jeopardize your settlement.
  6. Be committed to the program. When you start debt settlement, you must have curbed your spending habits and are no longer accruing additional debt. If you are still spending unnecessarily and getting into further debt, then debt settlement may not be your option.

Get Out Of Debt With Credit Card Debt Settlement

Debt can be a crippling thing that causes prolonged stress and sleepless nights, and it can rob you of life's joy, especially when collectors persistently call at your door. Debt settlement is the most suitable option to help you out of your situation.

Use the articles on Processing Card's blog section to learn how to navigate credit card debt successfully.

Was this article helpful?
YesNo
About the Author

Demystifying Level II and III Data: What It Does for Merchants

Enter you email below to receive the guide.

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

Processing Card will use the information you provide on this form to be in touch with you and to provide updates and marketing.

High-Risk Merchant Account For Credit Repair and Education

Enter you email below to receive the guide.

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

Processing Card will use the information you provide on this form to be in touch with you and to provide updates and marketing.

Understanding 3D Secure 2.0 Technology

Enter you email below to receive the guide.

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

Processing Card will use the information you provide on this form to be in touch with you and to provide updates and marketing.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram