When you're in over your head in high credit card debts, debt relief may be available to you. When you can't afford to pay off your credit card debts in full, credit card companies may agree to "settle" your credit card debt for less than you owe. Especially if you have already fallen behind on payments, and your credit standing is hurting, a debt settlement program may be a debt relief option to explore as an alternative to bankruptcy.

Why would credit card companies agree to settle with you? If you are truly struggling financially and in need of relief, they may be willing to consider your financial circumstances and accept much less than you currently owe under a debt settlement arrangement.

The fact is, if credit card companies decide to "sell off" your debt to a third-party debt collection agency, they may receive as little as ten percent of the original amount owed. Credit card companies will not agree to settlements this substantial, however It's stands to reason, that credit card companies may be willing to consider a reasonable offer to settle made by you or on your behalf by a credit card debt settlement company or debt mediation specialist. How does debt settlement compare with debt consolidation or debt management? With debt consolidation you still pay back all the money you owe - but you may get relief through lower interest rates and, often, a lower payment each month. With debt settlement you may not pay back the total amount owed, because the credit card companies may agree to "settle" your debt for substantially less.

It's important to note that neither both debt management or debt settlement will magically make debts "go away." With debt management, even though creditors may agree to more favorable interest rates and terms, it is the debtor's responsibility to make payments each month and adhere to the debt management plan. With debt settlement, even though credit card companies may agree to "settle" debt for substantially less, it is the debtor's responsibility to "set aside" money each month in order to accumulate an amount of money that can be used to offer as a settlement. Finally, both debt management and debt settlement will typically impact your credit, although the impact will not likely be as severe or long-lasting as a personal bankruptcy.

Debt settlement, also known as debt mediation or debt negotiation, could help you to settle credit card debt, potentially saving you a substantial amount of money as compared to what you currently owe. If you have more than $10,000 in credit cards and other unsecured debts, debt settlement could help you:

• Settle your credit card debt for less, if creditors agree to the settlement offer.
• Provide you with a flexible monthly "set-aside" payment so that you can accumulate funds to extend a settlement "offer"
• Provide you with a alternative that you can explore in addition to declaring bankruptcy
• Provide you with a way to reduce, or "settle" your total credit card debt for substantially less

How much you save by settling your credit card debt depends on your financial situation, how much credit card debt you currently owe, and the current policies of your creditors. It is important to know that credit card debt settlement will typically have a negative impact on your credit, but not as severe or long-lasting as a personal bankruptcy. In addition, those entering a debt settlement program can still facing legal action for defaulting on terms of the original agreement. Finally, any amount of money saved through a debt settlement program may be subject to taxation.

To qualify for debt relief through debt settlement:

• Have a minimum of $10,000 in credit card debt, store cards, unsecured bank loans or personal loans
• Be able to put a minimum amount of money aside each month that can be used to extend a settlement offer to your creditors.

Debt consolidation, also known as debt management or credit counseling provides debt relief by consolidating, or combining, all your unsecured debts such as credit cards, medical bills, charge cards, utilities, etc. into a single, lower and easier payment. Debt consolidation can may be able to help you remove stress, and reduce debt on an accelerated time table.

Debt consolidation may be the best option for you if you currently have more than $2500 in unsecured debts, are facing financial difficulties, and need a way to regain control of your finances by reducing your interest rates and combining all your debts into a single lower payment you can afford.

Debt consolidation may help you to remove stress, reduce interest rates, and save money by combining all your unsecured debts into a single, lower payment each month. You may be able to find relief and save money if credit card companies and other creditors review your situation and agree to offer you the benefits of debt relief by:

• Reducing your interest rates
• Waiving late fees and penalties
• Helping your lessen financial stress and accelerate the debt reduction process.

How much you could potentially save by consolidating your debts depends on your financial situation, how much you currently owe, and what your current interest rates are, and how diligent you are to remaining faithful to making monthly consolidated payments to help speed up the process of debt reduction.

The bottom line: As debtors seeking relief avoid taking on additional debt, and paying off existing debt under more favorable terms, debt consolidation through a debt management plan can help consumers gain control of their finances and become debt-free, generally in as little as three to five years.

To find out how much you could save through debt consolidation, get your free debt relief analysis and savings quote now.

You qualify for debt relief through debt consolidation if you:

• Have a minimum of $2500 in unsecured debts such as credit cards, medical bills, store charge cards, utilities, etc.
• Are able to make a consistent minimum payment each month in order to ensure that your lower interest rates and other money-saving benefits continue.
• Are able to stop taking on additional debt while you are on the program

Many people consider debt management or debt consolidation through credit counseling a more honorable way of getting debt relief, because you are paying back what you owe, just under a much more workable and affordable program that can allow you to get back on your financial feet. Debt consolidation through debt management may be able to save money by reducing your interest rates, removing late fees and penalties - while reducing your current monthly payments, often dramatically. The concept behind debt consolidation is to provide individuals in debt with a workable and predictable path to get back on track financially and pay down debts as quickly as possible

Bankruptcy is the legal process by which individuals or businesses discharge their debts in the event that they are no longer able to pay them back in a reasonable time frame.  The two chief goals of bankruptcy are to 1) give debtors a fresh start, a new financial lease on life and; 2) pay creditors back as much as possible without putting too much burden on the person who is declaring bankruptcy.

The main categories of bankruptcy are Chapter 7, Chapter 11, and Chapter 13. These names correspond to the actual chapter that describes each type of bankruptcy in the U.S. Code.    Chapter 7 is normally used by individuals who are of low income (normally half of their states average income), and basically this form of bankruptcy discharges all applicable debt an the individual must liquidate any of the debtor's assets that are not exempt under the law (such as a home). Individuals who have personal income that is higher than the states median income typically use chapter 13, and it allows debtors to repay part of their debt over a timeframe of three to five years.  In addition, those who want to keep certain property rather than relinquish it as part of bankruptcy proceedings use Chapter 13.  Finally, businesses or corporations most often use Chapter 11 bankruptcy.

Bankruptcy can be a viable debt relief alternative if other means of debt relief have been explored and it seems bankruptcy is the solution that is best suited for the individual or company. While other debt relief alternatives such as debt management and debt settlement require some sort of repayment plan or "set aside" settlement fund, bankruptcy is more applicable for those who are financially in a very tough spot and may have little or no income at all, and thus, little hope of paying back debts in a timely manner.  The benefits of bankruptcy are:

• Discharge of Personal Debts
• May Provide Fresh Financial Start
• Remove Stress - Stop Calls from Creditors
• Remove stress
• Allow the Individual to Begin to Rebuild

How much bankruptcy can save an individual, of course, depends on how much money is owed and discharged under the bankruptcy. It is important to note that bankruptcy is a serious financial decision that has a long lasting impact on a person's credit standing so it is important to consider alternatives carefully before proceeding.

To qualify for bankruptcy you must:

• Participate in a federally sanctioned credit counseling program. This class must be completed within six months of filing for bankruptcy.
• If your monthly income is less that the state's average monthly income for individuals, you may qualify for Chapter 7 personal bankruptcy, if not, you still may be eligible for a Chapter 13.
• Add up your monthly income. Subtract your total monthly expenses from this income amount and then multiply by 60. If your net income is less than $9,999 and is not more than 25% of your debt, you may qualify for Chapter 7 bankruptcy.

Again, bankruptcy is a serious form of debt relief that is considered to be the solution of last resort because it has the most serious financial impact on individuals. Although it provides a fresh start, it also can impact your ability to get credit and loans in the near future.

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