Though debt settlement is an option, some may consider researching bankruptcy

12/07/2009

Credit card debt is a problem many consumers face, and there are a few ways they may be able to deal with it, including debt settlement.

In a recent column for the Los Angeles Times, personal finance expert Liz Pulliam Weston received a letter from a reader who wondered if it is going to take a long time to pay off credit card debt anyway, maybe people should consider opting for debt settlement. Of course, the question becomes one of how doing so may affect a person's credit score.

"You can't predict how much credit card settlements would hurt your credit scores (other than "a lot") or how long it would take your scores to recover," Pulliam Weston wrote.

Pulliam Weston said that if it will take a person longer than five years to pay off their debts, they may consider filing for bankruptcy rather than debt settlement. However, both options could affect a person's credit score.

For example, FICO recently noted that a person with a credit score of 680 could expect a bankruptcy to drop their score by as much as 150 points, while debt settlement could reduce it by as much as 65 points.

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