Credit card debt can have a profound effect on your life. You don’t want to answer the phone or check the mail because you’re always afraid it’s the creditors calling or mailing you, you’re hesitant about spending money, and your credit score can be ruined for the rest of your life all for a few miscalculations or overspending.
Even if you’re making the minimum payments on your credit cards it can still take years, maybe even decades, before you’ve completely paid off your card. But with careful planning and by following credit card debt solutions you can start to dig yourself out of the financial hole.
Credit Counseling
Credit counselors are there to offer you advice on how to properly manage your money and how to gather all of your credit card debt into one simplified amount. They can help you with planning out a budget and can even give you the benefit of free educational information so that you know what you’re doing when consolidating your debt. A good credit counselor will be trained and certified in consumer credit, debt, money management, and budgeting. With them you’ll have to be completely honest about your financial situation and your spending so that they can identify your problem areas and work with you to resolve them and develop good spending habits. Further, they take one large monthly payment from you and then distribute it among creditors whom they’ve worked with to get you a lower payment as well as lower interest.
Credit counselors are also a great way to go because they can allow you to be debt-free in about one-third of the normal time it would take you on your own, stop over-limit and late fees, protect your credit score, and get your creditors to re-age your account which means list them as “current” on your current score. They can offer you peace and quiet from the constant collection calls.
Debt Settlement
Although it’s not one of the best options, some people have no choice but to take the debt settlement route. These programs are made for people whose debt problems are much more severe than what you would normally see. It’s possible that your credit damage can be made even more substantial after enrolling in this kind of program, but the resulting benefits may far outweigh the risks if your need is great enough. Another thing to keep in mind before enrolling in this kind of program is the air of uncertainty surrounding these kinds of programs. The negotiation process offers no promises that your debts will be dealt with in a promising manner and there still exists the possibility that the consumer can still be sued.
Anyone researching this option should also be aware that even if you enroll in a debt settlement program they might not start the process until a certain time, which could be several months after you have started paying them. While all of this is going on you’re still receiving harassing phone calls and feeling the pressure of your creditors while spending more money that you may not have on a service that might not work.
Even though debt settlement programs can be risky, if you find the right one the benefits can be great. Consumers can experience lower balances, lower consolidated monthly payments, or even have their debt paid of in 2 to 5 years.
For anyone with rampant financial problems enrolling in a debt settlement program can prove to be a better choice than filing for bankruptcy. But in some cases filing for bankruptcy is the only solution to their debt as they can’t pay both their credit card payments and their settlement program payments.
Bankruptcy
Bankruptcy is a process set up by federal laws that make it possible for you to cancel many of your debts through a court order. This process also make it possible for any of your creditors that are owed money the opportunity to claim a share of money that the debtor can afford or is obligated to pay back.
There are six types of bankruptcy that a person can file for. Chapter 7 bankruptcy is the easiest and swiftest form of bankruptcy that is available and is a simple liquidation for a business or individual. Chapter 9 is known as municipal bankruptcy and used mainly for municipal debts. Chapter 11 deals with rehabilitation of reorganization and is utilized mainly by either people with monumental debt, or businesses. This is also known as corporate bankruptcy that allows a company to keep going while repaying their debt. Chapter 12 is for fishermen or farmers. Chapter 13 is known as Wage Earner Bankruptcy and offers a payment plan for all or part of the debt for a person with a regular source of income. Chapter 15 is designed mainly for foreign cases.
With so many credit card debt solutions there’s no way that you won’t be able to find peace of mind from creditors.
