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Consumer Credit Card Debt Relief

For consumers who can't afford to pay credit card debts, credit card companies may now agree to "settle" or "forgive" a substantial amount of your debt. How much could you save? It depends on your circumstances and the total amount of credit card debt you have, and the credit card companies existing policies on extending relief to consumers going through financial difficulties.

To find out how much you could save, take a moment to enter the type of debt you have and you will be connected to a debt relief company that can provide you with a free debt relief analysis and savings estimate - at no obligation.

Credit Card Debt Settlement or Debt Negotiation

These days, more and more consumers are falling behind on the monthly credit card bills. It's not surprising because easy credit and high credit card interest rates have contributed to a massive wave of individuals needing relief

Fortunately, there is a legal form of debt relief that, while detrimental to your credit, typically doesn't have the same long lasting impact on your personal credit as a bankruptcy. This debt relief is called "debt settlement", "debt mediation", or "debt negotiation". All three of these debt solutions are basically interchangeable - as credit card companies may agree to forgive or settle debts for much less than the total amount owed.

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You could call this debt relief option a consumer debt rescue or consumer debt aid because it is credit card companies who are realizing that their opportunity to collect the full amount from many consumers may be relatively limited and they may allow consumers to "settle" for less than the full amount owed. This form of debt relief has become increasingly popular among consumers - and credit card companies who at least get a portion of their money back, which may be far better for them than if the consumer had declared bankruptcy.

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

Debt Consolidation, Debt Management, and Credit Counseling

Another form of debt relief is called debt management. With this solution, consumers may be able to consolidate all of their high interest rated unsecured debt into one lower payment each month. By reducing interest rates, consumers, over time, are able to pay off the principal amount of their debt much faster than they likely could on their own. This can save a consumer a substantial amount of money over time.

It is important for consumers to understand the truth about credit card debt and realize there are many debt relief options available including credit counseling, debt management, debt settlement, and even bankruptcy. Each of these options offers certain advantages for consumers. They also can have a negative impact on your credit, depending on the option you choose. However, if you have high credit cards or other debts, have fallen behind in your payments, or if you are stressed over debts - it makes sense to evaluate all of your legal debt relief options.

To see what debt relief could do for you start by selecting the type of debt(s) you have and the amount you owe. You will be connected to your free debt relief analysis and savings estimate at no obligation.

Request your 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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