When your credit card debt is out of hand, you don't have to change your telephone number or hide from the credit card company. You can try to settle the overdue balance and free yourself from credit card debt.
Facts
You can settle credit card debt with either the original credit card company, or if the debt is more than six months old, the collection agency that bought the debt.
Features
The credit card company will update your credit report to reflect the settlement. This notation can remain for seven years and reflects poorly on your debt management.
Effects
The credit card company will write off the unpaid balance you owe as a tax loss. You must then include the written-off debt as income and pay taxes on it.
Considerations
If you settle debt with a collection agency, rather than credit card company, you can request that the company delete its negative collection account from your credit report before you make a payment.
Significance
Although settling credit card debt can bring debt relief, evidence of the settlement on your credit report will make it tougher to get approved for new credit cards with reasonable interest rates.
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