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Credit Card Debt Relief

If you have high credit card debts, there is some good news: Consumer credit card debt relief is available that could help relieve the burden of debt, and possibly save you a substantial amount of money as well. To see how much you could save, take a moment to answer a few simple questions, and you'll receive your free debt relief analysis and savings estimate - at no obligation.

If you are struggling with credit card debt that you simply can't afford to pay, or you're using your credit cards to pay for the essential things in life like food, rent, medical bills, etc. there are proven debt relief options you may want to consider.

Regardless of your financial situation, debt relief is available and, in today's tough times, it's not surprising that consumer debt relief has become more and more popular.

For many people debt management through credit counseling or credit card debt settlement programs have been able to provide much-needed relief and save a substantial amount of money.

While both of these options can help you get out of debt and save money, both of them can also have an affect on your credit, so it is wise to consider the money-saving benefits of debt relief, as well as how it could affect your credit.

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Debt Management

In looking briefly at common credit card debt relief options, it's important to understand that both options can provide you with relief from credit cards and other debts, but they are both very different in how they work. With a debt management plan through a credit counseling service, you are committing to pay back all of the debt you owe, but you may get significant relief through lower interest rates, waived fees, and penalties, so you can rid of debt much faster. Since creditors may agree to provide you the benefits of lower interest rates, more of the money you pay each month goes to pay down the principal amount of your debt.

Debt management plans, if you are diligent and faithful to the plan, could help you get out of debt much faster than you could on your own -- if you were to continue paying off your cards at a higher interest rate. Many people prefer debt management plans through credit counseling as a more honorable way to pay back debt that they have accumulated. While credit counseling may be noted on your credit report, it does indicate to your creditors that you are attempting to pay back your obligations and could even help to improve your credit as you pay down your balances over time and significantly improve your debt-to-credit ratio which accounts for roughly 35% of your overall credit score.

To see how debt relief could help you, take a moment to answer a few questions, and you will receive a free debt relief analysis and savings estimate at no obligation.Select the type(s) of debt you have and the amount you owe using the form on the right.

Just make sure if you do enroll in a debt management plan that you remain on time with your monthly payments, because if you do default on your plan, creditors may not allow you to continue on the plan at reduced interest rates, but instead you may have to revert to the original higher rates you were paying.

Debt Settlement

Another popular debt relief option is called debt settlement or debt negotiation. This is a more aggressive form of debt relief whereby high credit card debts, typically credit card debt in excess of $10,000. may be settled by credit card companies for much less than the full amount owed. It is not unusual for credit card debt settlement to save a large portion of a consumer's debt, depending on the credit cards being held, the amount of debt owed, and one's financial circumstances.

Credit card debt settlement or debt negotiation will normally have more of a negative impact on your credit than debt management because, under debt settlement, you will typically fall further and further behind in your payments to credit card companies as you put aside a sum of money that will eventually be used to negotiate a settlement. While you are defaulting on the payment terms of your credit cards, you may, for a time, be getting calls from creditors and even letters threatening legal action. Despite the fact that debt settlement affects personal credit and can give rise to legal threats and action, debt settlement still has become increasingly popular with consumers looking to get debt relief -- by paying what they can afford, without declaring bankruptcy.

Explore your debt relief options. Request a free debt relief estimate and savings analysis, at no obligation to you.

So why would you want to explore debt settlement when it could lead to additional stress and affect your credit? Because many credit card companies, once they understand your financial situation and see how much money you've set aside to pay them off as a lump sum settlement amount, may decide it makes business sense to settle your debt for much less than you owe, rather than get little or nothing at all if you were to default entirely on your debt.

Overall, debt settlement could help you settle credit card for much less than you owe.

While many people may cast debt settlement in a negative light, in today's tough times with many families in serious credit card debt and looking to explore legal debt relief options to bankruptcy, credit card debt settlement has become a popular and acceptable debt relief solution, and it has truly helped many people settle their credit card debt and move on with their life.

Understand Your Options

If you do decide to take advantage of legal debt relief, either through a debt management plan or debt settlement, make sure you clearly understand all the terms of your debt relief agreement prior to enrolling. Understand also how much money you could potentially save, how long it is likely to take you to realize those savings, and how your credit could be impacted.

Request a free debt relief analysis and savings estimate in minutes. Start by answering a few, simple questions here.

All About Your Debt Relief Options

Debt consolidation is a debt relief option allowing individuals to combine or "consolidate" multiple higher-interest credit card, or other unsecured debts (such as medical bills, store or gas cards) into a single, more affordable payment each month. Typically, debt consolidation programs are coordinated by debt counselors who customize a "debt management plan" providing consumers with a proven and predictable path to get out of debt.

Pros

  • Provides proven, predictable program to become debt free
  • Saves money, reduces interest, waives late fees/penalties
  • Allows you to pay off debts at a pace that fits your budget
  • Manages multiple debts via single more affordable payment
  • Puts you back in control of finances to help reduce stress

Cons

  • Requires discipline to make single monthly payment
  • If you default, you revert to original creditor agreement
  • Creditors not required to accept debt relief proposals
  • Often takes 3-5 years, or more, to become debt free
  • While not necessarily harmful to your credit score, will be "noted" on your report

Summary: What to Expect

If you have multiple credit cards and other unsecured debts like medical bills, doctor bills, store cards, unsecured personal loans, and more – a debt consolidation program coordinated through a debt counselor may be the ideal debt relief option to help you live within a set budget, reduce debts, and get on a path to become debt-free.

How do debt consolidation programs, or debt management plans work?

Typically, debt consolidation programs are coordinated by debt relief specialists, or debt counselors, who conduct brief interviews with you to get details on your credit cards and other debts, as well as how much you can realistically afford to pay each month to get out of debt.

Based on this information, your debt specialist will then customize a "debt management plan" for you. Once you approve the plan, letters will be sent on your behalf to each of your creditors requesting the benefits of debt relief – such as lower interest rates, a waiving of late fees and penalties, and generally more favorable repayment terms. Those creditors who accept the proposals are then added to the debt consolidation or debt management program. For those that do not accept debt relief proposals, you are still obligated to live up to the original terms of your cardholder agreement.

It's important to understand that, just as no two debt situations are exactly alike, no single debt solution is right for everyone. Your debt specialist can provide more details regarding debt consolidation or debt management as part of your free debt relief analysis and savings estimate.

Debt settlement is a debt relief option that has become increasingly popular among people who need relief from high-balance credit cards (typically $20,000 to $125,000 or more). Through debt settlement, debt specialists negotiate with creditors on your behalf – with the goal of "settling" your credit card debt for substantially less than you currently owe.

Pros

  • By settling debt, you can save a substantial amount of money
  • Can help you settle credit cards in as little as 12-36 months
  • Allows you to make low monthly payments you can afford
  • Settles debt and provides alternative to bankruptcy
  • While negative to credit, not as severe or long-lasting as bankruptcy
  • Unless "attorney-based" fees only paid after successful settlement

Cons

  • Typically only benefits those with high-balance credit cards
  • Amount of money saved through debt settlement subject to taxes
  • Requires discipline to "set aside" money for successful settlement
  • Creditors may threaten, or take, legal action to collect debt
  • Negative impact on credit due to default on credit agreements
  • Creditors may not agree to accept your debt settlement offer

Summary: What to Expect

If you have one or more high-balance credit cards and are going through financial hardship – credit card companies may agree to "settle" your credit card debt for substantially less than you currently owe.

How does debt settlement work? A debt relief specialist will review your current credit card debts and the amount of money you can afford to set aside each month to accumulate a "settlement fund". Debt specialists will then negotiate with credit card companies on your behalf with the goal of settling debt for substantially less than you currently owe.

How much debt settlement could potentially save depends largely on the amount of credit card debt involved, your current financial circumstances – and the settlement policies of credit card companies.

It's important to understand that, just as no two debt situations are exactly alike, no single debt solution is right for everyone. Your debt specialist can provide more details regarding debt settlement or debt negotiation as part of your free debt relief analysis and savings estimate.

There are many well-respected self-help credit and debt experts who provide a wealth of valuable advice on the wise use of credit and how to become debt free – experts such as Dave Ramsey, Suzie Orman, Clark Howard, and many others. But regardless of the system you follow – the first step in a successful do-it-yourself debt relief program is to do everything possible to live within your means – avoiding unnecessary "impulse" purchases that cause debts to spiral out-of-control. By creating and maintaining a realistic budget, you will avoid taking on additional debt.

In addition, you can take steps on your own to reduce existing debt by contacting creditors directly to request more favorable interest rates or terms, or offer to settle debt for less than the full amount owed.

The bottom line: If you have high-interest credit cards and other debts and are struggling to make ends meet – you are in need of debt relief. Whether you take advantage of a debt relief program such as debt consolidation or debt settlement, or commit yourself to take control of your finances and negotiate with creditors on your own – take positive steps today to get on the path to become debt-free.

7 Important Debt Relief Tips

  1. Create a realistic spending plan – a personal or family budget
  2. Set aside money each month to pay down your existing debt
  3. Stick with your plan. Avoid unnecessary "impulse" purchases
  4. Contact your creditors requesting lower interest rates or to settle debt
  5. Pay down debts one-by-one, starting with highest-interest debt
  6. Don't use credit cards! Use a debit card to stay on track
  7. Avoid taking out additional loans that add to your debt load

Bankruptcy is generally considered to be the debt relief option of last resort. There are several types of bankruptcy: Chapter 7 (straight bankruptcy or liquidation), Chapter 13 (reorganization of debts), and Chapter 11 (debt reorganization normally used by a business or partnership). While a successful bankruptcy can provide a fresh financial start – individuals or businesses should carefully consider bankruptcy before proceeding because of its long-term financial implications.

Pros

  • Debtors given a fresh start – a new financial lease on life
  • Upon filing Chapter 7 or 13, collection efforts must stop
  • Debts discharged. Creditors forgive most unsecured debts
  • Your home, auto, and other essentials may be protected
  • Wages you earn after bankruptcy go to you, not creditors
  • From bankruptcy filing to relief takes about 3-6 months

Cons

  • Bankruptcy stays on your credit report up to 10 years
  • Makes it difficult to obtain credit for home, auto, and more
  • Requires forfeiture of your existing credit cards
  • You lose property not exempt from sale by trustee
  • Doesn't discharge student loans, tax debt, alimony
  • Debt option of last resort that can be embarrassing

Overview

While bankruptcy is a debt relief option that has been able to provide a fresh start for many individuals, families, and businesses – it is a serious decision that should be carefully considered with the assistance of a financial advisor or attorney who can help determine if bankruptcy is the proper course of action.

Prior to 2005, those filing bankruptcy could choose the type of bankruptcy they preferred – and most elected to file Chapter 7 straight bankruptcy (liquidation) over Chapter 13 (structured repayment). However, rules enacted in 2005 now requires those filing Chapter 7 to pass a "means test" – to qualify, they must earn equal to or less than the average monthly income for a family of their size in their state.

In addition, before you can file for Chapter 7 or Chapter 13 bankruptcy, you are now required to complete credit counseling with an agency that has been approved by the United States Trustee's office.

While bankruptcy plays a vital role to help rescue individuals and businesses, it is important to recognize that it's not the only debt relief option. A debt specialist can provide more details on debt relief alternatives to bankruptcy as part of your free debt relief analysis and savings estimate.

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