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Settling Credit Card Debt
Taking the Right Steps to Get Out of Debt
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Settling credit card debt has become a major focus for many as the financial crisis of the last few years has hit people from all walks of life.
As the economy recovers and they try to return to a normal life, many different avenues have opened up for these individuals.
What Are the Best Ways to Settle Credit Card Debt?
- Debt Consolidation
This is a popular way of handling debt. The goal of reducing payments is really secondary
in this solution. The major achievement here is in simplifying debt payments.
A lot of people find themselves suddenly surrounded by credit card debt.
This can happen as people open up one credit line in order to help them get by while they make payments on their other cards.
Debt consolidation is essentially a new loan. A debt consolidator lends a client enough money to pay all credit card debts at one time.
The multiple debts of the client are now converted into one debt with one debt payment per month.
Often, this is accomplished with a
lower interest rate so that there are long-term savings as well. Clients do not have to worry about missing payments and hurting their credit ratings
anymore. Besides with the savings possible, this also helps keep the client on the good side of the credit reporting agencies.
• Debt Negotiation
Other companies will, for a fee, intervene on behalf of debtors and negotiate with creditors.
The goals of these negotiations are varying. Sometimes, it is possible for these representatives to convince credit card companies
to reduce their interest rates in order to ensure full repayment.
Others may agree to lower the principals or freeze the amount owed
for a period of time. The possibilities are really endless. In general, they do not allow a debtor to escape debt so much as they
allow him or her to create manageable situations in which repayment is possible. These deals may or may not reflect badly on credit ratings.
• Debt Settlement
Debt Settlement is a bland term for an aggressive approach to settling credit card debt.
This is a negotiation from strength. Credit card companies are hampered in their collection tactics by the unsecured nature of their lending.
They have little way to enforce collections besides harassment and bad credit reports.
Settlement advisers simply counsel clients to stop payments. Instead, clients give their debt advisers a sum every month which accumulates in an account.
The advisers use these sums to negotiate with creditors. Once creditors accept payment, they close debtor accounts
and credit ratings begin to climb again.
• Bankruptcy
This solution gets a bad name, but it is the best solution for many people. Once decided by a judge, bankruptcy erases debts definitively
and creditors can no longer harass debtors about them. However, bankruptcy does hurt credit ratings for several years.
Settling credit card debt is the first step in recovering your own financial well-being. As the economy begins to pick up the pace again,
a lot of people see this move as a way to recover their own financial standing.
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