Consumers that do not monitor their credit will soon find themselves deep in credit debt. It starts out slowly, and then it becomes a problem that prevents you from being able to pay your bills every month. The problem is not necessarily the balances that you are carrying, but rather the trouble you get into by missing payments or making payments late. When the high credit account balances start to get compounded with the high interest charges, the payments become too much and your credit rating suffers.
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There are many different ways to handle high credit card debt, and each has its own merits. The key for you is to find that debt management method that is both legal and effective.
Debt Management
Debt management is the process of developing a personal monthly budget and then using your own money to handle your debts. No matter what debt relief method you choose, every consumer should be working from a monthly budget to monitor expenses.
The good part about using debt management is that you can utilize your own resources to pay your bills. You do not need to take out a loan and you do not need to rely on any kind of secondary credit. The bad thing about debt management is that you are dealing with the credit card account balances that had been causing you problems for months. Rearranging your budget is probably not going to help much.
Debt Consolidation
One of the more popular debt relief methods for getting rid of credit card balances is debt consolidation. This is a program where you use a loan to bring together all of your monthly payments into one single account.
The primary benefit of consolidation is that it makes it easier to pay your bills because you are dealing with one payment versus several. Another advantage of consolidation is that you may get a loan with a lower interest rate than your cards and save money that way.
But debt consolidation has its challenges that make it a bad solution. The primary issue with debt consolidation is that you need to be approved for a loan to get in on the program. As we had just discussed earlier, credit issues lead to bad credit scores, and it is difficult to get approved for a loan when you have bad credit.
If you are not able to get an unsecured personal loan due to bad credit, then you would have to put up collateral to get a secured loan. It may be difficult for the average person to come up with thousands of dollars in acceptable collateral for a secured loan. Another issue with debt consolidation is that, even with a slightly lower interest rate on the consolidation loan, you are still paying for the full balances of your cards. In reality, debt consolidation loans may not provide enough relief.
Debt Settlement
Debt settlement remains the strongest option for all of the debt relief programs available. It may be the best legal and efficient way to get rid of credit card debt, and it can be done quickly.
A debt settlement program helps you to achieve lower payoff balances with your existing credit accounts. You make one lump sum payment to settle your outstanding debts and save thousands.
The average debt settlement plan takes 24 to 48 months to complete and the end result is that you are rid of credit card debt.
Bankruptcy
If you can qualify for Chapter 7 bankruptcy and you do not care about your credit rating for up to 10 years, you may want to consult a bankruptcy attorney. Chapter 7 allows you to fully discharge your unsecured debts but it has serious negative effects on your credit. Chapter 13 bankruptcy, on the other hand, should be avoided unless there are no other options. Compared to Chapter 7, Chapter 13 does not offer as many benefits for debt relief.
When you want to address your debt quickly and legally, you may want to get involved in a debt settlement program. Debt negotiation can bring your credit card balances down relatively quickly with few short term consequences.
Whether you have good or bad credit, you will find that a debt settlement program is the best way to attack your credit card debt and get rid of it once and for all.
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