What credit card debt relief option will work best for you?

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Monday, May 11th, 2009 Subscribe To Our Feed

Everyone knows that this last 365 days has been one of the scariest in terms of financial problems. This recession has forced hundreds of thousands of people into very stressful financial situations. It appears like virtually everything that could go wrong did go wrong. We are witnessing record numbers in houses getting foreclosed upon, the hundreds of thousands of people are losing their jobs each month, and to make matters worse consumer credit card debt has reached an all time high. These headaches are leaving consumers to search for a sensible form of credit card debt relief to help them get back up on their feet. There are two primary forms of debt relief that people have been using, and they are debt settlement and credit counseling.

Credit counseling is a program offered and run by the credit card companies. The benefits of utilizing a service like this are to have your debts compiled into one monthly payment and to have the interest rate lowered. This isn’t a real method of debt reduction because the balance itself is not in reality lowered, just the APR. The drawbacks to this plan are that the payments are many times aren’t much less than the payments a consumer was paying out to start with. And what most people don’t know is if you miss a single payment you will lose the advantages of the program and have it cancelled.

Credit card debt settlement is a much different form of debt reduction. With a debt settlement plan the benefits are saving cash and precious time. In many situations the client will save in excess of 50% of what their balance previously was and see themselves out of credit card debt in just a mere few years. With that being said there is a drawback to credit card debt settlement and that is the debtor must go delinquent on the payments for the creditors to be in a position to negotiate a settlement. So obviously your credit rating will suffer when you begin this plan. However after the settlements start going through the credit score will heal itself and go back up.

These two types of programs will not be feasible for all. Which plan is better suited to you depends on your unique financial situation. I would say look into both methods and research which can help you more in your situation.

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