What to do with a debt of $ 200,000?
Firstly, stop paying off to the creditors: the representative of the credit card debt settlement company will ask you to stop payments to your creditors and deposit a certain amount monthly into a savings account (i.e. a trust account that X-company creates for you).
What is of a real benefit to you is that you don??™t have to handle the collection calls any more. It is obvious that once you stop paying off, you are sure to start getting collection calls, which more often are really maddening. But once you are under the protection of the X-company, such calls are effectively handled by the representative.
Soon after that the Negotiation will start: as you accumulate a good sum into the trust account, the representative at the credit card debt settlement company starts negotiating with your creditors one by one.
Your debt will be reduced by up to 40-60%. When the creditors make out you are not able to pay off enough, they are sure to agree to accept the reduced amount, say around 40-60% of your outstanding bills.
While you are paying off present debt, you wait for better offers from other creditors. You should make sure that any extra money coming in will be used to pay off your bills. And approximately in two years or a bit longer, you will find yourself able to settle credit cards debt with all of your creditors.
What you should keep clear in your head that no matter whether it's a credit card debt settlement program or the one which involves any other dues, you should stop paying off to your creditors from the very start. Instead, send in your payments to the settlement company. Otherwise, you won??™t be able to gather enough to settle credit cards dues and your other bills, and the debt settlement company you??™ve turned to won??™t be able to start negotiations with your creditors, and the attempt to stop the collection efforts would be a failure.