So, you have finally realized that you’re in a pickle with all that credit card debt and you need a way out. The only problem is, you don’t know where to begin. Well, if you need to know where to find credit card relief advice, keep reading. We’ve got you covered.
What is Debt Relief?
It’s a way to handle debt from credit cards or other unsecured debt like personal loans or medical bills. It could mean erasing debt in one fell swoop, changing your interest rate or payment schedule to decrease your payment amounts, or getting your creditors to take less than the total amount you owe.
Credit Counseling
If you want advice, this is what these people do. You’ll first have a session – about a half-hour, during which a certified counselor will assess your case, including your challenges and goals. In preparation for the meeting, you should have a list of current expenses and recent paystubs and credit card statements.
The counselor can help you create a budget and may offer financial literacy resources including a workshop or two.
If you’re struggling to get a handle on your debts, the credit counseling route may be best for you. If your situation is more severe, the counselor may suggest a debt management plan. Keep reading for more on a DMP.
Debt Management Plan
With this approach, you and your counselor will decide which credit cards to include in your plan. Most counselors will want to enroll them all, but you may be able to keep one for emergencies. The other cards will be frozen while you’re in the program. You also are barred from opening new credit lines until you’re done.
Working together, you and the counselor will come up with an affordable payment. Subsequently, the agency will go to your creditors to see if they’ll accept payment through it. It also wants to lower your rate and stop all penalties and fees.
Once all creditors are on board, you make a single monthly payment to the counseling agency, which allocates it to your creditors as per the agreement.
Debt Settlement
If you want credit card relief, debt settlement is one of the most tried-and-true ways to pursue it. How it works is, you get a company such as Freedom Debt Relief to go to your creditors to see if they’d accept less than what you owe to have your debt marked “settled” on your credit report. Creditors usually go along because if you file bankruptcy – your logical next step, otherwise – they may not get a thing.
Rather than pay creditors directly, you’ll set up an escrow-type account into which you’ll make monthly deposits. Once you’ve saved up enough, the account will be used as settlement leverage. When each account is settled, and approved by you, payments will come from that account.
Bankruptcy
This is a strategy of last resort, so you’ll want to get advice from a bankruptcy lawyer as to its viability – for you. You’ll first have to see if you’re even eligible. Depending on the type of bankruptcy you choose, and the state in which you live, you might have to liquidate assets such as a second vehicle or vacation home.
The other rub regarding bankruptcy is that the filing stays on your credit report for 10 whole years. And your credit cards may be cancelled. So, tread very carefully here.
Now that you know where to find credit card relief advice, you can move forward with confidence knowing that your new, debt-free life in right around the corner.