Debt Settlement Program

Everyone would love to solve their debt problems without all the unpleasantness of debt collection. Of course, the easiest and fastest of all credit card debt solutions would be to just pay it off lump sum. But, if you had that kind of money, you certainly wouldn’t be reading this. Read on to find out your options to solving your debt troubles.

1. Consolidation Loan

One of the best credit card debt solutions is consolidation, which is basically getting a loan to pay off your credit card debt. This is desirable if you are paying five or more credit cards at varying interest rates but whose average is higher than the interest rate of your consolidation loan.

Let us take for example, you have debts in the total amount of 20k with an average APR at 18% divided into three different cards at varying interest rates. Let us say you are paying a monthly minimum of 2% for all these cards. It will take you a total of 749 months and 58,394.31 in interest to pay off all of it. But let’s say, to pay off all your credit card debt, you took a consolidation loan in the amount of 20k with 15% APR and your monthly payment is slightly higher than minimum at 3.5%. It will take you only 205 months, which includes 10,977.58 in interest, to be completely debt free. That’s quite a difference.

2. Debt Settlement

This option involves negotiating with your creditor to write off a significant portion of your debt by reducing your outstanding balance by as much as more than 50%. Creditors are willing to make a debt settlement offer if the debtor has enough funds to pay off the reduced overdue account. You can affiliate yourself with a debt settlement program if you are not comfortable making the negotiations by yourself. Most debt settlement companies promise to make you debt free within 2-3 years, but this is yet to be supported by reliable statistics on their success rates.

3. Debt Relief

This entry is more of a warning rather than a recommendation. Debt relief is quite similar to debt settlement such that some or all of the debt is forgiven by the creditor. However, this is mostly made available to heavily indebted countries and established organizations. I have yet to see an ordinary individual get a debt relief from his or her creditor, so be wary of scams going around targeting desperate individuals.

4. Debt Management

A credit counselor will analyze your financial situation taking into consideration your income as against your debts. The counselor will then prepare a budget based on his findings of your finances designed to allow you to be effectively debt free the shortest possible time. Some counselors also offer their services to negotiate with your creditors for lower interest rates and/or to forgive late payment fees and other penalties.

These are just some of the many credit card debt solutions available that are much better alternatives than the dreaded hide and seek practice that many debtors imprudently resort to. The option that will lead to a ‘debt free you’ the fastest will depend on your needs and your current financial situation.

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