When we speak about the subject of credit card debt and debt relief, many questions come to mind. First and foremost are the issues of what forms of credit card debt relief are most effective.
And really, these are the 2 most important aspects of credit card debt. No one wants to enter a debt relief program only to later find that the Jones’ across the street got a better debt relief deal or entered into a better debt relief program.
Bankruptcy, this is one serious legal avenue. But the fact is that bankruptcy brings with it a host of booby traps. It can cause very serious repercussions for those who file for personal bankruptcy. For starters, as was recently revealed by FIFO, a bankruptcy filing will drop one’s credit score by 260 points. This credit report then for all practical purposes will be viewed as toxic in the eyes of creditors.
The consumer who files for bankruptcy will for many years be unable to obtain any sort of credit or financing for much needed things. In fact, in many states a bankruptcy filing will remain on a consumer’s credit record for up to 10 full years.
Debt consolidation is another debt relief avenue taken by consumers who are strapped with mountains of credit card debt. But debt consolidation also has its share of pitfalls and can be risky strategy. The reasons are as follows:
Credit card debt is unsecured debt. When a consumers enters into a debt consolidation plan that involves a debt consolidation loan or a home equity loan, the consumer is in fact exchanging unsecured debt for debt that is secured by their home.
In the event of the consumer being unable to make their monthly payments at some time in the future, they would be at very serious risk of losing their home, therefore consumer beware when it comes to both bankruptcy as well as debt consolidation.
The most effective debt relief program however is known as debt settlement. This program has shown spectacular results at both reducing and eliminating credit card debt without the need for a bankruptcy filing. But how does debt settlement work? Who is eligible for debt settlement? And how much credit card debt can be eliminated through the means of a debt settlement program?
Debt settlement is a debt relief program that works by a debt settlement firm negotiating on behalf of the consumer with the consumer’s creditors. And what are the results of these debt negotiations? In most debt settlement scenarios, the consumer can expect to have 50% of their credit card debt reduced and eliminated, and in many cases the consumer can see 70% of their credit card debt eliminated.
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