Great questions. You asked if it would be a settlement plan is "any better than them sending the amount to collections". I am assuming you are referring to the damages made to your credit. If I were you I would concentrate on getting out of debt as opposed to your credit score.
I understand that one's credit rating is important. Please consider two things: 1: Credit is important when looking to obtain more debt. It is not nearly as important when trying to get out of debt and; 2: Based on the information you’ve provided, it seems as though your credit has already taken quite a beating. You should really concentrate on what your doing to pay off the debt and not your credit.

Your next question what regarding Third Party Debt Consolidation Companies. The answer is no, they are not the same thing. The credit card company is willing to settle the debt with you for a percentage of what you currently owe and write off the remaining balance as a loss. The most difficult part of the settlement program is that the credit card company will typically ask for all of (or most of) the negotiated amount up front in one lump sum. I would suggest going with a third party Debt Settlement company instead.
Debt consolidation companies simply negotiate the interest rates with the creditors and lump you payments together into one payment. The savings aren’t incredible and the repayment terms are anywhere from 3 – 7 years.

Debt Settlement companies negotiate the principle (typically to 40 cents on the dollar), eliminate interest and late fees and customers typically graduate from the program in 1 -3 years. The debt settlement option is more time and cost effective than debt consolidation. you can go to End The Debt . Org and click on the financial calculator for a comparison.



quote=strat66;10671]Okay well, A year or so ago i was being stupid and racked up some credit card debt. I maxed out two credit cards. One was a capital one credit card and the other a Chase credit card. I managed to pay off the capital one card. But the chase accumulated to much interest and i was over my limit. So it was impossible for me to pay it off after i lossd my job and got another low income job. It was just high interest and over limit fee's pilling on top of each other.

Well I got a letter today for a credit card "settlement plan". It says in the letter that they have not sent it to collections yet. I was wondering if this is at all any better than them sending the amount owed to collections? Or is this so called "settlement plan" the same exact thing as third party consolidation company's?

What are your guy's opinions in which i should do. Wait untill it goes to collections and get a better deal or what?[/quote]

You're in a really tough spot. I faced similar letters that seemed almost like a 'threat' to me. If you're struggling to keep your head above the water because of debt as I did then please read my blog in my sig. You might be entitled to free federal grant money from the government. The program was a godsend to me, they sent me enough money to get back on track. This is part of the stimulus package and not enough people are taking advantage of the opportunity to get out of debt with help from the government. I hope this helps you as it helped me greatly!

Remember that collection companies are very expensive options to banks usually 50% or more if they are paying the bank out, if they are doing it on a percentage they often get 30%. That is why they are trying to get you into some type of a settlement plan, especially today bankers are trying harder to avoid having to write off any more then they have to.

Talk it over with them they are most likely willing to work something out.

Today much of the finance world is holding their breath hoping consumer credit does not go int meltdown so they are more then ever motivated to deal with you the borrower to keep from having to write off your debt.

Try getting Dave Ramsey's book. He gives great advice on credit card debt.

Any debt settlement company that tells you they are negotiating on the principle balance, eliminating interest and the settlement amount will be aroun 40 cents on the dollar based on the principle are full of it. Yes, this happens sometimes, but more often the settlement amounts are around 50 cents on the dollar, and the amounts are based on the current balances, interest included.