Credit Card Debt Relief Options
Consumers who are heavily burdened with credit card debt and unable to resolve their financial troubles through budgeting and better money management, or by increasing their household income, or by getting financial help from freinds or relatives, are basically left with only a few alternatives. These alternatives are either enrolling in a Consumer Credit Counseling Service's Debt Management Program, seeking relief through a Debt Reduction Settlement, or Filing for Bankruptcy. If you find yourself financial stressed and considering bankruptcy, we strongly suggest that you first call 1800DEBT.COM for a FREE Debt Consultation. Filing for bankruptcy should only be considered as a last resort. Call our toll-free number right now. If you are not in a position to speak to a counselor at this moment in time, you may also click here to make your request online for a free consultation.
Credit Card Debt Relief
Through A Debt Consolidation Loan
Debt consolidation loans are provided through financial institutions. whereas all debts are paid off with the proceeds of the loan. In effect, the debts are transferred from many creditors, to one creditor, and hopefully, as a result, provides the debtor with a lower overall monthly payment and reduced interest rate.
For some debtors this may prove effective, but for others the end result only compounds their financial problems. This is because a consolidation loan does not always reduce the debtor's monthly debt service sufficiently, and most detrimental, requires "security" in order to process the loan, typically with the debtor's home equity. Should the debtor default, he or she risk losing their home!.
Using funds from a debt consolidation loan, second mortgage, home equity loan or line of credit to pay off unsecured debt should ONLY be done when it results in significant savings, and the effect of it resolves your financial hardship. You MUST be reasonably certain that you will never default on the obligation. Otherwise, it is not practical and financially sound to convert unsecured debt to secured debt and risk losing your home! .
Credit Card Debt Relief
Through Consumer Credit Counseling
Consumer Credit Counseling Services (CCCS) do not provide loans but rather restructures a consumer's debt using special channels that are made available only to non-profit Consumer Credit Counseling Services. Most major creditors have hardship programs in place which allows for reduced payments and lower interest, providing that the consumer enrolls in the debt management program, thereby closing all, or most, of their unsecured accounts and placing them in the program. The consumer then makes a fixed monthly consolidated payment directly to the agency, which in turn, disburses the funds to each of the participating creditors according to a prescribed schedule and payment agreement.
Not all creditors offer forbearance, however, and although most do, the forbearance granted can vary dramatically with each creditor. In addition, each creditor has their own policy regarding a minimum acceptable payment. Failing to meet this minimum typically results in no forbearance being granted.
Consumer Credit Counseling Services typically do not negotiate with creditors. They merely set up a client's account according to each creditor's hardship policy. For example, if a debtor owes $1,000 to Superior Bank, and that bank's hardship policy requires a minimum payment of 2.2% of the outstanding balance, the agency must set up a payment of $22. If the debtor's regular minimum balance is, say, $40, then there is a reduction in payment. In some cases, however, there is little reduction, and sometimes, it actually results with an increased payment. On the other hand, if the debtor is past due on his regular payments and unable to catch up, the revised payment may reduce the debtor's obligations significantly. This is because enrollment in the program typically sets aside any past due amounts.
The revised payment is usually based on the outstanding balance at the time of enrollment. It should be noted that oftentimes creditors will not lower the payment or offer any forbearance on loan accounts. Therefore, the type of debt also plays a significant role.
In essence, how much a debtor's overall monthly payment can be reduced going through Consumer Credit Counseling Services depends entirely on who the creditors are, the type of debt and the amount owed to each creditor. In some cases the savings can be substantial, and in others it may be negligible. The only way to determine this is to analyze the debtor's financial profile. To learn more about debt management programs call 1800DEBT.COM for a free debt consultation with a certified debt professional or click here to apply online for debt relief.
Credit Card Debt Relief
Through A Debt Reduction Settlement
A Debt Reduction Settlement is a process used by both debtors and creditors to settle a debt for less than what is owed. If negotiated properly on behalf of the debtor it can quickly and dramatically reduce the debtor's debt. Settlements range from 30% to 70% of the current debt, with the typical debt settled for 45 cents on the dollar. After paying Agency fees, a typical client realizes a savings of around 20% to 40% of their original debt placed in the program.
Debt Settlements are offered through third party debt negotiators, or attorneys as is more typical today due to state laws. There are numerous factors to consider when negotiating a debt settlement. Some of these factors include, the type of debt, who the creditor is, the amount of debt, how old is the debt, the debtor's ability to pay the debt as agreed, the debtor's assets and liabilities, and so on.
Also of paramount importance is the debtor's ability to raise funds to settle their debts. Typically, funds used to settle debts are saved over a period of time — usually a 3 year period.
Enrolled in a debt settlement program, clients open a trust fund or savings account and then make deposits into the account on a regular basis. To accomplish this debtors elect to stop making payments on their unsecured accounts, opting to place whatever funds that are available into the account. When enough money is saved, a debt settlement is negotiated for one of the accounts. The strategy is to first settle the account which is most troublesome and provides the greatest savings. The process continues in this fashion until all debts have been settled in full.
What is of utmost importance in seeking a debt settlement is working through a highly experienced debt settlement attorney that will not only negotiate the best settlement, but will also deal with your creditors effectively throughout the process. We cannot overstate the importance of this. Today, there are many companies claiming to be debt negotiators, but many have little experience, are ineffective in negotiating truly favorable settlements, and fail miserably in handling creditors and serving the needs of their clients. As a result, sadly these agencies have tarnished the debt settlement industry.
Debt negotiation is a specialized field that requires years of knowledge and expertise in order to negotiate the most favorable settlement and to manage the day to day operation of handling creditors and clients. An agency must be well staffed with professionals knowledable in all areas of debt negotiation, debt management, banking, creditor and collection law, federal and state regulations, and must have specialized technology to handle ongoing creditor calls, to process negotiations and transactions, to handle payments, and to effectively communicate with staff members, clients and creditors.
There are many risks associated with enrolling in a debt settlement program and it should only be used as an alternative to bankruptcy. While many creditors will negotiate a settlement others may not. During the process creditors typically continue to make collection calls, report past due payments to credit reporting agencies, may continue to charge late fees and interest, and may even resort to legal action. Prior to enrolling in a debt settlement program you must weigh out these risks and determine whether filiing for bankrupcy is a better option.
o learn more about debt reduction settlements call 1800DEBT.COM for a free debt consultation with a certified debt professional or click here to apply onlinefor debt relief.
Filing For Bankrupycy
Bankruptcy is a legal procedure which can give people who cannot pay their bills a fresh start. A decision to file for bankruptcy is a serious step. Filing for bankruptcy should be considered only as a last resort.
There are two types of bankruptcy available to most individuals. Chapter 13 (reorganization) allows debtors to keep property which they might otherwise lose, such as a mortgaged house or car. Reorganizations may allow debtors to pay off or cure a default over a period of three to five years, rather than surrender property.
Chapter 7 (straight bankruptcy) involves liquidation of all assets that are not exempt in your state. The exempt property may include items such as clothing and basic human needs, work-related tools and basic household furnishings, among others. Some of your property may be sold by a court-appointed official or turned over to your creditors. You can file for Chapter 7 only once every six years.
Both types of bankruptcy may get rid of unsecured debts (those where creditors have no rights to specific property), and stop foreclosures, repossessions, garnishments, utility shutoffs, and debt collection activities. Both types also provide exemptions that permit most individual debtors to keep most of their assets, though these "exemption" amounts vary greatly from state to state.
Bankruptcy cannot clean up a bad credit record and may be part of this record for up to ten years. It can, for example, make it more difficult to get a mortgage to buy a house. It usually does not wipe out child support, alimony, fines, taxes, and some student loan obligations. Also, unless under Chapter 13 you have an acceptable plan to catch up on your debt, bankruptcy usually does not permit you to keep property when the creditor has an unpaid mortgage or lien on it.
Bankruptcy cases must be filed in federal court. Choosing a bankruptcy lawyer may be difficult. You may also consider filing bankrupcy without an lawyer. If you take this step we suggest that you purchase a Bankruptcy Software Kit that is inexpensive and can save you time and hudreds of dollars in attorney fees.
To avoid the negative impacts of personal bankruptcy, individuals have a number of bankruptcy alternatives. Call 1800DEBT.COM or click here to request a free debt consultation to check out your options for debt relief.
Speak To A Certified Debt Professional
We strongly suggest that prior to filing for bankruptcy or engaging the services of any debt relief service that you first speak to several debt professionals. Obviously you can call anyone that you wish and speaking to 3 or more debt professionals may prove very beneficial in finding the right solution. So, by all means, be sure to check out the various resources listed on this page and website.
We highly recommend, however, that in your research you call 1800DEBT.COM for a FREE debt consultation. By calling this number you will not only be able to speak immediately to a "certified" debt specialist, but based on the area code you're calling from, your call will automatically be routed to a debt professional in your local area. Today, each state has their own laws, regulations and licensing requirements, so it's important to speak with someone who is familiar with your particular area.
In addition, the certified debt specialist will be able to assist you in various ways depending on your particular situation. So do yourself and your loved ones a favor and call right now and speak to a debt professional. The call is absolutely free, completely confidential and there is no obligation whatsoever. You truly have nothing to lose, except, that is — your debt!
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