Unpaid debt often leaves a person with a combination of overwhelming feelings that
can literally send his or her life spiraling out of control. As stressful and
overwhelming it can be there are a number of credit card debt relief options that could
help you save money and in turn get you out of debt.Most importantly to make any
credit card debt relief option work, you are advised to stop accumulating any new
credit card debt and use the credit card wisely. As with high interest rates, high
monthly payments, large credit lines, and late fees a credit card can dig a person
deeper into debt.
To attain freedom from debt, different common types of debt relief options are
available like roll up strategy, debt consolidation, consumer credit counseling and
debt settlement. It is advisable that you understand the different methods and see
which option will work to your advantage.Certain debt relief options may prove more
effective for some people than others due to individual financial circumstances.
Instead of paying only the monthly minimums, it is possible for you to pay off your
debt through a planned repayment, known as roll-up strategy. To effectively use this
method, you may need to cut down on your expenses and make a budget that will
forbid you from over-spending. You will be making your regular payments to your
monthly debts but the extra cash saved from cutting down your expenses will go
towards paying your highest interest account so that you may be able to pay it up as
soon as possible. If you continue doing this for each of your accounts; you may
possibly become debt free without any assistance from third parties.
But if you are not able to manage your debt on your own you may opt for a debt
consolidation loan. You may either take up a secured debt consolidation loan which is
obtained against collateral like your home or a car or you may use a debt
consolidation service. A secured debt consolidation loan means you are probably
getting a lower interest rate in comparison to your high interest rate credit card debt
and the debt is spread over the term of your mortgage as it is secured against your
home. It is tax deductible. However, the downside to this is that you may risk losing
your home if you are unable to service the second mortgage. Furthermore, mortgages
are long-term loans so it may mean the monthly payment could be lower but at a
cumulatively higher cost as it spans the term of your loan and hence it may take you
longer to achieve financial freedom. In the second option, you get a debt
consolidation agency to help you consolidate your debts into one single payment. The
agency will negotiate with your creditors and arrange a payment schedule so that you
only pay the agency while they will settle with your creditors.
Another option of debt relief is credit counseling which typically involves using the
services of credit counselors to negotiate a settlement with your creditors and
establish a debt management plan (DMP). A DMP is made in such a way that it helps
you to budget your expenses and get debts into manageable amounts. The credit
counselor contacts each of your creditors, and works out a plan where you repay your
debts over a three to five year period. Often they can negotiate a plan where your
repayments are made with little or no interest, so you can repay your debts faster.
You may search for a reputable debt settlement firm to help you negotiate credit card
debt. These firms will negotiate with your creditors to reduce your debts, sometimes
by as much as half of your principal balances, and since it takes 2 to 3 years to
complete, you may possibly find yourself debt free pretty fast using this option. The
drawback to this option is that it may damage your credit rating while you are under
this program as you are required to stop payment to your credit card and pay into the
account opened with the negotiators.
You are encouraged to take the time to familiarize yourself with all debt relief
options before coming to a decision.