Credit card companies earn by issuing cards.
People use these cards to make purchase.
The amount is then billed to them.
Most of us pay the minimum amount regularly for months.
If you were to analyse your payments you would find that over the period of time the outstanding amount increases instead of decreasing.
The credit card companies keep earning whereas the customer falls into what can be easily termed as a debt trap.
This whole earning methodology falls flat when the people are unable to make even the minimum payments and start filing for bankruptcy.
As the ratio of bankruptcy increases the earnings change into losses.
Once a person opts for bankruptcy no credit card company can recover their money.
The state law supports the customer and if a person has been approved for bankruptcy the credit card companies are at a total loss.
Due to the recent economic recession, many people have been forced to file bankruptcy.
With so many people defaulting on their accounts financial institutions as well as the Government are alarmed.
The credit card companies which were making profits are now incurring heavy loss.
When the customer files for bankruptcy it is a total loss for the companies.
Hence in a bid to recover at least a small part of the money the companies are now encouraging their customers to opt for debt settlement.
If your unsecured debt is over ten thousand dollars and you are an American citizen then you might be able to get up to 50 percent of your debt eliminated.
Some of the debt settlement companies can negotiate up to 60 percent as well.
If you are facing bad debt, bankruptcy can be completely avoided and in turn a long term bad credit rating.
Choose debt settlement instead.