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What are the Different Credit Card Debt Options?

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  • Written By: Dulce Corazon
  • Edited By: W. Everett
  • Images By: Karelnoppe, Merkuri2, Bradcalkins, 2Xsamara.com, Philip Taylor, Bramgino
  • Last Modified Date: 23 January 2020
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Those who are mired in credit card debt have numerous credit card debt options to choose from that should help in dealing with their dilemma. These include debt settlement options, credit counseling, and the option to file for bankruptcy. Most of these credit card debt options can generally help borrowers deal with their personal debt or business debt. Dealing with credit card debt properly can often prevent ugly legal action like credit card debt lawsuits from credit card companies.

A debt settlement program is one of the credit card debt options. It is mostly used by those who have debts amounting to more than $10,000 US Dollars (USD). In this credit card debt option, individuals have to negotiate with their credit card companies for a reduction in their debt.

Borrowers usually have to convince their lenders that they are mired in financial difficulties, and thus need a reduction in debt to be able to pay the amount. One of the main reasons why creditors agree to such an arrangement is that it ensures them that they get something from their borrowers. Typically they would rather have something from the debtor, which would not be possible if the borrower files for bankruptcy.

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Reduction in debt frequently differs in rates, but a borrower can get as much as 50 percent of the total debt erased if the borrower makes good on his negotiation with the lender. In doing debt negotiation, it often pays to get the services of a good debt resettlement firm, which can help in making lenders agree to the reduced debt. Debt resettlement is often considered as the best choice among the credit card debt options available.

In filing for bankruptcy, a person declares that he is no longer capable of paying off his credit card debt. The borrower usually has to prove that his average income in the last six months is lower than the state median. He then generally must give up non-exempt assets like a home or jewelry, which will be sold off to raise enough money to be given to the creditors. The main benefit of this set-up is that the person no longer has to pay monthly repayments. It, however, becomes a disadvantage because a bankruptcy will show on the credit report of a person for the next 10 years.

Credit counseling is another credit card debt option one can choose. This is a process in which consumers are educated on how to avoid being mired in credit card debt. It often involves negotiating with lenders for a debt management plan that can help the borrower repay the debt. The debt management plan usually has reduced payments, reduced interest rates, and reduced fees that allow the borrower to pay off his debt.

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