If you have credit card debt in your name, then probably the one thing you hear from most people is “join the gang!”. With more and more people struggling to pay their credit card debts, credit card companies are actually having a field day. Minimum monthly payments plus interest for almost a lifetime is what you are effectively stuck with.
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However, if you think the best way out is declaring bankruptcy, think again! Not only will your credit report be ruined, but you can also say goodbye to your chances of getting any loans or credit cards in the future, without making it seem like a Herculean task! What you need to look into, instead, is credit card debt relief.
Credit card debt relief means – you get better payment options, loans with easier terms to repay your debt easily, or a discount on your total credit card debt in exchange for a lump sum payment (so much so, that you may end up paying only 50% of the original amount!).
There are many companies or firms that offer you debt relief with an experienced team of people figuring out how you can get out of credit card debt as soon as possible. Of course, you may also achieve credit card debt relief yourself by reading up about the options available to you, and how they will work for you. In both the cases, it would be a great idea to know how credit card debt relief works.
Debt management is the key to credit card debt relief. You need to manage your debts well so that the payments are not a sword hanging on your head. You need to find alternatives and manage your debt through easier/simpler options.
Credit card debt negotiation and settlement
Under this option, instead of making minimum monthly payments plus interest to your credit card company for years, you can instead make monthly payments to a trust or a special account. When enough money has been collected, it is used as a one-time lump sum payment in lieu of your total credit card debt. In exchange for the lump-sum payment, you can negotiate the amount that you owe the credit card company. This could mean paying even as less as 40% of the original amount. Your creditors will only consider this option if you fall back on your payment for 3 or more months.
Credit card debt consolidation
If you have multiple credit card debt payments every month and find it very difficult to keep up, then debt consolidation is perfect for you. Think of it as one single big loan to take care of all your smaller individual loans. The terms of this new loan are much easier, with lower interest rates and longer repayment period.
Credit counseling
If your situation is very severe, with credit card debts, bills, interest and late fines piling up, and your expenditure continuously on the rise too, then you need to get credit card debt relief through credit counseling. Credit counseling helps you take matters in your own hands. You can get budgeting advice and help, learn how to manage your money, cut down your expenditure and plan your monthly payments. Your entire financial situation will be discussed threadbare, so that you can get help deciding what steps to take, and how to plan and manage everything. Credit card debt counselors also help you through workshops and training programs, to use your card to your advantage, and not fall in the debt trap.
Before you consider any of the options, do your research. Compare all the credit card debt relief programs offered to you, and see which one suits your situation best. The various debt relief companies will also charge you a (usually) hefty fee. However, a word of caution against credit card debt relief scams before you hire the first company offering you immediate relief and guarantee to lower your payments and interest. These could just be people looking to make money out of your misery. People who have been scammed of hundreds of dollars will tell you that it always helps to check credentials before you hire any such services.
The option of negotiating and settling your debt yourself, or enforcing strict budgeting and planning till things get better is also in your hands.