Will I Still Be Able to Use My Credit Card After Debt Settlement?
When you are making only the minimum payments on your credit card for months or years, the debt can accrue very quickly. As credit card debt increases, your minimum monthly payments will also increase. At some point, you may be unable to make even the minimum monthly payments. At that point, you might be late on payments, and late fees will then begin to accrue and increase the total debt you owe. You may become delinquent or even in default. Yet you ultimately could find yourself in a position where you can afford to pay off a chunk of the debt. For example, perhaps you received a bonus or a raise at work, or you took out a home equity line of credit. Or, for example, you may have recently inherited some money and you want to pay off debt with it.
In such circumstances, you will want to work with an attorney to negotiate a settlement agreement. But you might be wondering: will I still be able to use my credit card after settling my debt? Consider the following information from our Lilburn debt settlement lawyers.
Account for the Settled Credit Card Debt Will Likely Be Closed
For the most part, settling credit card debt results in the credit card account being closed by the bank that issued the credit card. Often when debt is settled, the debtor is already delinquent or in default. In addition, debt settlement works such that the creditor accepts only a percentage of the total debt owed — in order to receive something from the debtor — in exchange for an agreement to forgive the remaining debt. Under those circumstances, a creditor is not going to want to allow the debtor to continue to make charges on that account that they ultimately may not be able to pay.
Indeed, according to a CBS News story about credit card debt settlement, “if your credit card was included in the debt settlement agreement, that account was almost certainly closed as part of the deal.” You will not be able to continue to use that credit card.
Applying for New Credit and a New Credit Card
Although you should not expect to be able to continue using a credit card after you have settled the debt associated with that card, you can certainly apply for new credit and a new credit card.
Debt settlement will impact your credit score, but not nearly as significantly as a decision such as bankruptcy. Once you settle your debt, you can begin rebuilding your credit and can become eligible for new credit again.
Contact a Georgia Debt Settlement Attorney to Discuss Your Credit Card Debt Today
Do you have credit card debt on one or more credit cards, and are you hoping to be able to settle the debt? If so, you should begin working with an experienced Georgia debt settlement lawyer at Konn Law Firm LLC as soon as possible. Our firm can negotiate with the credit card companies to reach an agreed-upon settlement amount that will be only a percentage of what you owe. Once you pay the settlement amount, as we discussed above, your remaining debt will be forgiven. However, the settlement agreement will likely result in that account being closed. Accordingly, while you may be eligible to obtain a new credit card for future purchases, you will need to apply for a new credit card to begin making charges again. To find out more about settling your credit card debt, contact our firm today.
Source:
cbsnews.com/news/can-i-use-my-credit-card-after-debt-settlement/
