If you carry a large amount of credit card debt that you can't afford to repay in full, you may be wondering what your options are. One possibility to consider is that of debt settlement. Specifically, settling debt with your credit card companies allows you to reach an agreement on an amount you can afford to pay. To make the process easier on you, working with a debt settlement program is generally best. Regardless of the path you take, there are some common mistakes you'll want to avoid.

Confusing Settlement and Consolidation

First of all, understand that debt settlement and debt consolidation are not the same thing. Debt consolidation involves taking out a large loan to pay off your current debt at a lower interest rate. Debt settlement, on the other hand, involves negotiating a lower balance/payment amount with your credit card company based on what you can truly afford.

Not Knowing When to Contact Creditors

One of the biggest mistakes people make when trying to settle their credit card debt is contacting their credit card companies too early in the process. Credit card companies have strict procedures they need to follow when it comes to accounts with delinquent payments, and it's usually several months after an account has gone delinquent before they can begin negotiating. The best way to avoid making this mistake is to let a debt settlement professional contact your creditors on your behalf.

Telling Creditors You're Filing For Bankruptcy

Another very common mistake you don't want to make when settling your credit card debt is threatening to file for bankruptcy when a creditor isn't negotiating what you perceive to be a fair settlement. In reality, filing for bankruptcy doesn't guarantee that you won't still end up having to make payments to your creditors and can really stop the negotiation process right in its tracks—which is far from what you want.

Assuming Settlements Are All or Nothing

Understand that debt settlements are a negotiation. You shouldn't go into negotiations expecting to get exactly what you want. Instead, you need to be open to having a little flexibility if you want to reach an agreement. This is where working with a third-party debt settlement company can really make all the difference in helping you figure out what to expect from the process and what's fair.

Avoiding these common debt-settlement mistakes can help you get through the process quicker and easier. From there, you can begin your path to greater financial freedom.