A possible rise in defaults may prompt some to consider debt settlement, though consumers should tread with caution

01/28/2010

One of the reasons why consumers may consider debt settlement is because they are having trouble paying off their credit card debt.

And a recent report from Moody's Investors Service notes that the number of delinquencies on credit card debt dropped a bit in December, falling from 6.2 to 6.09 percent. The company also noted that early-stage delinquencies dropped for the second month in a row.

The firm noted that the decline of early-stage delinquencies could be a good sign for the charge off rate on credit cards, which increased 2.5 percentage points in 2009. However, Moody's said it still expects the number of defaults to reach as high as 13 percent during the year.

As a result of so many people facing advanced credit card debt problems, some may turn to debt settlement as a way to get some of what they owe paid off. However, many experts have advised consumers to be careful when it comes to debt settlement, as it could hurt a person's credit score.

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