Credit Card Debt Options
Channel: 911creditpros
Date: 2011-06-28

During these challenging economic times, millions of Americans are struggling with credit card debt.  Finding an effective solution to resolving this debt can be frustrating.  To help you learn more about your options, we've included a breakdown of the benefits and risks of each debt relief option.
 
1. Minimum Payments
 You continue paying your creditors the minimum amount each month
- Each month a huge portion of your payment is going towards the creditor fees (interest)
- Paying down the balance of your debt can take years
- To see how long it will take to finish paying your credit card debt, check out the CNN Money Debt Reduction Chart.


2. Credit Counseling
 You send your monthly payment into the credit counseling firm and they distribute that payment to your  creditors, usually for a period of 5 years or more.
- Helps reduce your interest rates
- If you're concerned with a lower monthly payment, credit counseling offers minimal, if any relief
- Your enrollment is reported to the credit bureaus, which could affect your ability to get a loan.
- A high percentage of consumers drop out of the program because they are difficult to manage
- Most credit counseling firms are funded by your creditors, which gives them the incentives to make you pay as much as possible


3. Unsecured Debt Consolidation Loan
 A bank pays off some or all of your debts and in turn you pay back the bank with interest.
- High interest rates
- Difficult to qualify for this type of loan
- Lenders interpret these loans as a sign of being overburdened


4. Debt Settlement
 A process of negotiation that allow you to pay your creditors less than the balance owed
- Affordable monthly payments
- Save thousands of dollars
- Possible to experience debt relief as quickly as 12 months
- Avoid bankruptcy

5. Bankruptcy
 Bankruptcy has a major impact on your credit score and stays on court records for a minimum of 10 years.  Employment could be in jeopardy for consumers having filed bankruptcy 
  
 Chapter 13 -- You are set up on a court approved plan to repay your debts
- The court determines your monthly disposable income, which you pledge to a court appointed trustee, who in turn distributes it to your creditors for up to 5 years.
- You are required to pay back a good portion of your debts
- Over 65% drop out of Chapter 13 bankruptcy repayment plans because they can't afford the payments
- Your credit score will be majorly affected and will be reported on your credit report for 7 years

 Chapter 7 -- You ask the court to erase your debts completely
- In exchange, you must turn over all your non-exempt property (or its equivalent in cash) to a court-appointed trustee, who in turn sells your property to pay back your unsecured creditors
- Your credit score will be majorly affected and will be reported on your credit report for 10 years
- In October 2005, Congress changed the bankruptcy laws making many consumers seeking bankruptcy relief only eligible for Chapter 13.  For clarification, seek the advice of a bankruptcy attorney.

If you find you have gotten yourself into a problem with credit card debt, it is important for you to take steps right now to take care of it.  This means you need to pay down that debt as quickly as you possibly can until you can achieve a zero balance.  One of the best ways to get out of credit card debt is to cut up the plastic and then make the largest payments you can for as long as you can to help take care of the problem.  

Call Today for a Confidential Consultations for Debt Relief Assistance 
480-502-5554