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Resources for Managing Credit Card Debt
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Posted On :
May-04-2013
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Article Word Count :
536
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Credit card debt can seem overwhelming but luckily there are many resources to help borrowers repair their credit and pay down their debt.
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Credit card debt can seem overwhelming but luckily there are many resources to help borrowers repair their credit and pay down their debt. Credit counseling non profit agencies allow borrowers to seek help with agencies that specialize in credit repair and avoid charging higher fees than necessary. Non profit credit counseling companies can present multiple options depending on the borrower's personal credit situation.
Debt Settlement
Debt settlement is one of the best ways that a borrower can resolve their credit card debt and other unsecured loans. With debt settlement the agency will contact the creditors and ask them to reduce the amount that the borrower owes in exchange for immediate repayment of the reduced amount. Many credit agencies are more than willing to allow this because they would prefer to get money immediately. Debt settlement resolves the outstanding credit accounts immediately. However, if the borrower cannot afford to pay the settled amount they may have to pursue other options. There is also no guarantee that a creditor will accept a settlement, which leaves debtors in worse situations than they were before.
Debt Consolidation
With debt consolidation, the credit counseling non profit agency will contact the borrower's creditors and ask them to reduce the borrower's interest rates in exchange for the borrower signing up for a debt consolidation plan. The reduced interest rates greatly reduce the borrower's monthly payments and this will allow the borrower to pay off the debt more quickly and manageably. Debt consolidation carries far fewer risks than debt settlement, so it is the preferred method by far.
Loan Consolidation
Loan consolidation should not be confused with debt consolidation. With loan consolidation, the borrower takes out a loan at a lower interest rate and uses the loan to pay for their open credit lines. This lowers the monthly payments just like debt consolidation, but it also can lower the borrower's credit score by opening another line of credit. Usually debt consolidation is a better solution than a loan consolidation. Loan consolidations are also very difficult to get unless the borrower has a perfect credit score or a co-signer.
Bankruptcy
Bankruptcy is the last resort for a borrower who simply cannot sustain their monthly debts. If a borrower cannot even make the reduced monthly payments under a debt consolidation plan and cannot make the lump sum payment for a debt settlement, it may be necessary for the borrower to declare bankruptcy. Bankruptcy requires that the borrower liquidate their assets in exchange for getting rid of their debts. Bankruptcy has a large impact on a borrower's credit and bankruptcy can follow a borrower for some time.
Managing credit card debt is difficult, but it is always worth doing as quickly as possible. The longer credit card debt is ignored, the worse it will get. There are many options for a borrower to cut their debt and some are more suited to certain situations than others. A non profit credit agency can help a borrower reduce their debt without charging them unnecessary fees. An agency can also go over the borrower's current finances to help them figure out which choice is the best choice for them.
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Article Source :
http://www.articleseen.com/Article_Resources for Managing Credit Card Debt_263891.aspx
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Author Resource :
The author has an immense knowledge on Credit counseling non profit. Know more about Credit counseling related info in his website.
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Keywords :
Credit counseling non profit, advantageccs.org,
Category :
Finance
:
Finance
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