The U.S. Congressional Joint Economic Committee stated in May 2009 that, before the recession began, 14.7% of American families had 40% or more of their income consumed by debt repayments. Identifying a viable source of credit card debt relief has become essential, especially for those with a poor credit history. Getting out of debt may seem like an impossible goal, but this needn't be the case. Depending upon which debt relief program is chosen, it is possible to become debt-free in a relatively short space of time.
Credit Card Debt Relief
Getting out of debt can be achieved through a credit card debt settlement program, Debt Management Plan or filing for bankruptcy under chapter 7. The borrower's credit history, disposable income and level of debt will ultimately determine which debt relief program is most viable. This means that getting financial guidance from a credit counselor is an important step for those who wish to become debt-free.
Getting Out of Debt with a Debt Management Plan
It is possible to get credit card debt relief by arranging an amendment to the amount that is contributed towards servicing credit agreements each month. The intermediary will scrutinise income and expenditure in order to determine an affordable monthly payment. Instead of making multiple payments, a single payment is made to an intermediary under a Debt Management Plan. After taking their 15% fee, the money will be disseminated to creditors on a pro rata basis. Most creditors freeze further interest and charges.
Credit Card Debt Settlement Program - Become Debt Free in 36 Months
A professional negotiator or intermediary will negotiate with creditors to reduce the amount owed by up to 50%. The debtor then makes a monthly repayment for a 12, 24 or 36 month period. The management fee is 15% of each contribution. Whilst a Debt Management Plan is better for getting out of debt when the amount owed is relatively small, a credit card debt settlement program or filing for bankruptcy under chapter 7 are the preferred option when a lot of credit has been taken out.
Filing for Bankruptcy Under Chapter 7 - Credit Card Debt Relief
Unlike a Debt Management Plan or credit card debt settlement program, it isn't necessary to make a repayment. The other principle benefit is that it is possible to become debt-free in as little as four to six months. Individuals who have little or no disposable income to offer creditors may find that getting out of debt by declaring bankruptcy is the only viable option. The laws were reformed in 2005 so the rules governing who can file have been tightened so that people cannot abuse them as easily.
Become Debt Free - Credit Counseling and Debt Help
It is important to seek guidance from a debt counselor with respect to the most effective way to pay off credit card debt. Debt Management Plans, credit card debt settlement programs and filing for bankruptcy each have their strengths and weaknesses that need to be assessed. Avoid waiting too long before seeking credit card debt relief - the longer the individual waits, the more difficult it becomes.
Sources
"Credit card statistics, industry facts, debt statistics." CreditCards.com.
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