Credit card debt is keeping up with other forms of debt in the US. As of Q3 2019, US credit card debt is $1.08 trillion. That works out to about $8,640 per American household. While not the costliest form of debt, it’s up there. And when you’re struggling with credit card debt, there are few easy ways out. But one of the paths that might work is a good credit card relief program.
What Is A Credit Card Relief Program?
Credit card relief entails finding a way to minimize the burden of your credit card payments. So, these programs aim to provide you with full or partial debt forgiveness. At the very least, they try to get you a lowered interest rate on your outstanding credit card debt.
There are many ways a credit card relief program can help you kill your credit card debt. These programs usually involve a step-by-step program for you to follow. But they all start in the same place.
Counseling
Any decent credit card relief program should start with a debt counseling session. This part of the process is normally free.
During a credit card relief program’s counseling session, you will have your current finances assessed by a professional. A certified credit counselor will look over your debts and income to see where you stand financially. The next steps they’ll suggest will depend on how bad your situation is. The worst debt situations will typically call for the most extreme measures, like debt settlement and bankruptcy. If your debt is more under control, you will be able to resort to less damaging alternatives.
Considering Your Options
Your debt relief specialist will present your best options. You’ll want to take some time to decide which ones you’re ready to take.
Debt Management
For cases of seemingly unmanageable debt, the first attempt at fixing them will typically be a debt management program. These programs involve several steps aimed at reducing your credit card debt burden so you’re able to pay your way back to financial freedom. Plans can often last up to 5 years.
With a credit card debt management program, you’ll consolidate your credit card debts into a single debt. This debt will be paid off on a monthly basis. Wherever possible, a credit card debt relief agency will negotiate for partial debt relief and/or reduced interest rates. You’ll also pay your agency directly and they’ll disperse your funds to your creditors. This simplifies your repayment process. All you need to do is make sure you have enough to pay each month. The main downside to credit card debt management programs is if you miss one payment, the whole plan may fall apart.
Bankruptcy
One of the things that credit card debt relief plans may include is Chapter 7 bankruptcy. This is an extreme option, but it may be seen as necessary when better options are unrealistic.
If you qualify for bankruptcy, you can begin a four-month process to clear yourself of most debts. Credit card debts are almost certainly included in personal bankruptcy. The only debts that for the most part won’t be forgiven are student loan debts.
Bankruptcy has a few downsides of course. You will temporarily lack credit. But it will take a full decade for your bankruptcy to be removed from your credit reports. During the decade following your declaration of bankruptcy, your credit score will be decimated and lenders will see your bankruptcy on credit reports. So, if a credit card debt management program can work, we’d highly recommend you try that first.
Which Credit Card Relief Program Is Best?
It’s hard to tell what the best credit card relief option is. That’s why it’s good to talk with a specialist about your option. Fortunately, consultations are often free. You will only have to pay once you enter your relief program. So, go ahead and reach out if you’re struggling with debt and don’t know your best option.
