Every day we get asked, "What’s the best way to eliminate credit card debt?”

In order to eliminate credit card debt, you have a few options:

• Hit the lottery and pay them off in a lump sum!
• Continue making minimum payments
• Enroll in a Credit Counseling Program or Debt Management program
• Enroll in a Debt Settlement Program
• Bankruptcy

Since winning the lottery is not likely, most people make the minimum payments to their creditors.  Requiring small minimum payments is a trick the credit card industry has been fooling consumers with for a long time.  If you make just the minimum payment on your cards, it could take 10-15 years and end up costing you 3-4 times the original amount you borrowed because of the interest rates and hidden fees.

Debt Management (formerly referred to as Credit Counseling) makes sense if you can afford the required payment of the program.  Legitimate DM programs will arrange repayment plans with each of your creditors that will lower your interest and fees and usually allow you to pay off all of your cards in about 48 months.  If you can afford the payment, this makes sense.

Debt Settlement is for those who cannot do any of the above.  Legitimate Debt Settlement companies will negotiate with your creditors to satisfy the debt for around 50% of the debt.  Your credit report will show this debt as having been charged off, but then it will show that it has been “paid as agree” or “account settled”.

If you cannot qualify for any of these programs, then bankruptcy may be your best or only option.  Be sure to seek the advice of a competent bankruptcy attorney.  It’s not a bad idea to get a couple of opinions when looking into bankruptcy.

Do you need help deciding what is the right option for you? Our Solutions Specialists are ready to review your current financial situation with you and help you decide which option is the right fit for you.  Give us a call or click on the link below for a FREE Debt Elimination Analysis today!

1-877-492-4109

photo by: alancleaver_2000

Dealing with Debt

As the economy has declined, many consumers have been relying on credit sources such as credit cards and home equity loans for everyday spending.

But we’ve come to realize that the days of free-flowing credit are over. Banks and lenders are lowering credit limits on credit cards and scrutinizing new borrowers. If you’ve been living above your means, addicted to credit of any kind, consider this your personal financial intervention!

Face the Debt Music

Debt management is not a one-size-fits-all topic, because every debt-holder is unique. Your debt could be the result of many different circumstances such as overspending, job loss, or medical bills. You have to gauge your own situation and face up to your ability or inability to help yourself.

Bankruptcy

If you’re seriously drowning in debt, the worst case scenario is to declare bankruptcy. This is the debt management option of last resort. Because a bankruptcy can stay on your credit report for up to ten years it will affect many aspects of your life for a long time. If you’re considering this option, you’ll need to consult a bankruptcy attorney for help with some tough decisions. 

Credit Counselors

Anyone who intends to declare bankruptcy must get pre-filing credit counseling from an approved agency within six months before the filing. The agency must be approved by the U.S. Department of Justice in the judicial district where you plan to file bankruptcy. You must also complete a pre-discharge education course in order for debts to be officially satisfied.

Debt Settlement

Debt settlement is another option if you want to avoid bankruptcy. The debt negotiation industry is growing rapidly. These companies are not low-fee, non-profit counselors, but representatives who aggressively work with your creditors on your behalf to reduce debts by 50% or more!

This is an effective strategy that could result in a deep discount on the debt.

Debt Consolidation Programs

You may be eligible to enroll in a debt consolidation program. These are also called one-pay plans, because the agency collects one monthly payment from you. They distribute the money to your creditors after negotiating lower payments and interest rates on your behalf.

Correct Bad Habits

In the best case debt scenario, you’re credit rating is still good, but you’re simply living above your means (you know who you are!). Debt is usually the symptom of saving too little and spending too much, a deadly combination. There is no magic formula to make debt disappear. The solution is to permanently change your financial behavior by becoming more disciplined with your money. Is it easy? Absolutely not. But the rewards of living life without a credit addiction include much less stress and better sleep.