Need Credit Card Debt Consolidation?
Many residents of Alabama and consumers all across the country accumulate credit card debts, often due to unforeseen circumstances. Their situation becomes unmanageable, and they find themselves caught in a spiral of debt that's hard to escape. As a result, more and more consumers are searching for a proven way to pay off credit cards. This is why credit card debt consolidation and even credit card debt consolidation loans have become popular strategies to payoff high interest credit card debts.
It is a sign of the times that the lack of financial discipline and overspending on credit cards has become a major source of debt and stress for many individuals and families. Visa, MasterCard, Discover, Capital One, Chase, Citi card, and many other credit cards can be quite convenient and tempting to use, but when times get tough, and you get in over your head with high-interest revolving credit card debt, a major financial crisis can hit you quite suddenly.
For many individuals who can't pay down credit cards, it's common that they've experienced a financial or family hardship and may be "forced" to turn to high interest credit cards to pay for the essentials of life such as food, medicine and maybe even utility bills. Consumers who find themselves in this difficult situation should not feel despair or guilt but take heart knowing that good people often get into debt for a variety of reasons and help is available through a variety of credit card debt consolidation or debt relief hardship programs.
If you are struggling with high credit card debt or experiencing a financial hardship and are in need of debt relief assistance, see how debt relief could help you: Get a free debt relief evaluation and savings estimate today.
How Does Credit Card Debt Consolidation Work?
With a credit card debt consolidation program, the goal is to combine or "consolidate" all of your high interest credit cards and other unsecured debts into a single, more manageable payment each month. For individuals and families struggling to get on track financially, these debt consolidation or debt management plans (DMPs) can help bring much needed relief from high interest rate debts, late fees, and penalties. In addition, they can provide a proven and predictable path out of debt for those who have the discipline to stop using credit cards and pay down their debts on schedule month after month. These programs can be quite effective, keeping in mind that these don't make debts magically go away. They can and may save thousands of dollars for consumers who have the discipline to stay with the plan and the wisdom to put the cycle of debt behind them.
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Credit card debt relief or debt management plans are typically coordinated through a credit counseling company who conduct brief interviews with consumers to gain an understanding of the hardship being experienced, how much actual credit card debt the consumer has and how much money the consumer can realistically allocate each month to pay down or payoff credit cards.
The credit counselor or debt counselor will then develop an affordable plan for the consumer and present proposals to creditors requesting lower interest rates and possibly a waiving of late fees and penalties. Those creditors who accept the proposals are then added, one by one, to the debt management plan (DMP). For consumers who get relief from high interest rates, and stay on course with the debt management plan by paying off the existing principal amount of credit cards, the savings as compared to paying monthly minimums for years and years can be quite substantial.
Find out how much credit card debt consolidation program could save you. Get your free debt relief analysis and savings estimate.
Know Your Credit Card Debt Relief Options
In addition to credit card debt consolidation (also known as credit counseling or debt management) programs, alternative debt relief options are personal debt consolidation loans, debt settlement, or even the debt relief option of last resort, bankruptcy.
The goal of a credit card debt consolidation loan is to combine or "consolidate" multiple high interest rate debts into a single, lower interest rate loan. Although debt consolidation loans certainly have been able to help many consumers, it's important to understand that they typically require the consumer to put up their home or other asset as collateral and, should the consumer default on the terms of the loan, the home or other asset could be forfeited.
By taking your unsecured debt such as credit cards and converting it into secured debt that puts your home at risk, this can be a risky course of action. In addition, it's a fact of life that many consumers who take out debt consolidation loans do indeed use the proceeds of the loan to payoff credit card debts, but unfortunately end up ringing up a whole new round of credit card debts. Now, the consumer has the debt consolidation loan to pay off as well as additional credit card debts. In this scenario, the debt consolidation loan has caused their debt crisis to go from bad to worse.
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While debt relief programs help many Americans during times of financial hardship, there are those who, regardless of their credit card debt situation, may also benefit from state-assisted programs and services to help them pay for utility bills, grocery bills, healthcare or childcare. To help low-income individuals and families get access to basic needs and services, the state of Alabama has a variety of financial assistance programs available, such as the Food Assistance Program (SNAP), Medicaid, and the Low-Income Home Energy Assistance Program (LIHEAP), among others. To learn more about these services, go to the state's homepage and click on the Benefits page.
Debt Settlement or Debt Negotiation
In addition to debt consolidation loans, debt management plans, and credit counseling, another increasingly popular debt relief option is known as debt settlement, or debt negotiation. The goal of debt settlement is to "settle" with credit card companies for substantially less than the full amount owed, whereas debt management refers to a payoff of the full amount of debts at a more manageable and more structured pace for the consumer. Typically, debt settlement is an option that consumers with high credit card debts ($20,000 or more) may consider as a viable alternative to personal bankruptcy.
As a more aggressive form of debt relief, debt settlement can potentially save consumers a substantial amount of money, as it encourages consumers in distress to redirect the funds they would normally be paying to credit card companies in order to accumulate the funds necessary to extend a settlement offer to creditors. When consumers use this strategy of building up a settlement fund, rather than paying according to cardholder terms, creditors have the legal right to threaten and take legal action if they choose to pursue this course in order to discourage consumers from going this route, or recoup losses.
In addition to the legal implications of debt settlement or debt negotiation, money that the consumer saves through a negotiated settlement, which can be quite substantial, is subject to taxation. Despite the legal and tax implications of debt settlement, it has become an increasingly popular debt relief option for consumers who are experiencing a financial hardship and need to settle their debts for a reduced amount, rather than walk away from their debt entirely and file for bankruptcy.
Why might credit card companies be willing to settle with consumers? For those consumers who fall seriously behind in payments, credit card companies may often "sell off" the debt to a third party collector for as little as 10 cents on the dollar, so it stands to reason that creditors may be willing to accept a reasonable settlement offer from consumers rather than get little or nothing if the debt is "sold off" or the consumer files for personal bankruptcy. It's important to note that when consumers stop paying credit card companies according to terms, credit scores will be impacted negatively, however debt settlement's impact on personal credit is normally not as severe or long lasting as bankruptcy.
To find out if debt relief can help you, get your free debt relief analysis and savings estimate.
Remember that help is available. If you're overburdened with high interest credit cards and other unsecured debts, you should evaluate and compare all debt relief options, get help from BBB-accredited debt relief providers, and make a genuine effort to pay down credit cards and other unsecured debts on an accelerated program. Debt does not have to be a way of life. You can gain control of your debts and get on the path to financial freedom, but it all begins with you deciding you don't want debts to control your life!