With over $2 trillion in credit card debt in the United States, it’s no wonder that so many Americans are in trouble with their credit cards. It’s not just their balances. The big fees for late payments and exceeding a card’s limit also hurt. That’s why many people seek debt relief options to help them pay off their debts and avoid bankruptcy.
There are three forms of debt relief available. There’s credit counseling, also known as debt counseling; debt settlement or debt negotiation; and debt consolidation. Each option has its own benefits, suiting people in varied circumstances. Here’s some information on those options to help you decide on the right one for you.
Credit Counseling
In this form of debt relief you work with a company to set up a debt management plan that will pay off your creditors. The credit counseling company works with them to reduce your monthly payments– typically by lowering or eliminating your interest rates. You then make one monthly payment to the credit counseling company and they in turn pay your creditors. A typical credit counseling program takes five years to complete.
Debt Settlement
This is a different form of debt relief whereby you settle your balances with credit card companies by agreeing to pay a percentage of what you owe—up to 50%. Debt settlement programs usually take only three years to complete and they save consumers more money than credit counseling.
Debt Consolidation
This used to be a great form of debt relief. With debt consolidation, consumers take out one loan to pay off all of their other loans. This was very popular during the real estate boom, since consumers could refinance their homes and pay off their bills. However, in these tough economic times, debt consolidation is much harder to achieve and more costly than other forms of debt relief.
Regardless of which debt relief program you take advantage of, finding the right company to work with is key. Here are some basic tips:
Before you sign up for advice and counseling, make sure they are free-of-charge.
Check out the websites of debt counselors you are considering. This will help you understand more about their services and get a sense of what it’s like to work them.
When you talk with a counselor, feel free to decline their services if you don’t feel comfortable with them. You should never feel pushed into a decision.
Making minimum payments on a $20,000 credit card debt at 20% interest can take decades to pay off. CDMA can assist you in settling your debt in 36 months or less.
