Debt Relief Options
If you are struggling with credit cards and other debts and looking or a way to reduce interest rates, remove late fees and penalties, or possibly even "settle" your credit card debt for substantially less than you currently owe, there are several debt relief options available to you.
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How Debt Relief Works
Credit card debts, bills piling up, creditors or collectors calling - one or more of these situations can often become overwhelming. The good news is, there are a number of debt relief options that you can choose from to help get back on track financially. First, it is important to point out that there are steps you can take on your own to help ease the pain. Number one, you can cut back on credit card purchases that are not absolutely essential. Second, you can start paying more than the minimums each month on your cards so you don't stay on the "debt treadmill" for life. Third, you can take advantage of a variety of debt relief options that could not only help to remove stress - but possibly lower your payments, and help put you on the fast track to getting out of debt.
Debt Consolidation, Debt Management, Credit Counseling
Debt consolidation, debt management, and credit counseling are actually very common terms for a single debt relief option that is available to many consumers - who are looking to pay off debt, reduce debt, or get out of debt as quickly as possible. Here is a quick review of how this debt relief option works.
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When you are stressed over high interest credit cards and other unsecured debts, a credit counseling agency can work with you to go over your current financial situation and review with you how you may be able to get relief from debts. You present all of your high interest credit cards and other debts for which you request to be part of the debt management plan (DMP). The credit counseling agency will then contact your creditors on your behalf and, one by one, make proposals requesting lower interest rates, a removal of late fees and penalties, and generally ask for more favorable terms with your creditors. Those creditors who accept the proposal are added to a single debt management plan to help you get out of debt.
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In this way, you have combined or "consolidated" your credit cards and other unsecured debts like medical bills, store charge cards, etc. into a single lower and more manageable payment each month that you make to the credit counseling agency -who then distributes your payments to your creditors.
By not continuing to ring up new credit card charges and by sticking to a customized debt management plan (DMP), or debt consolidation program to pay off your existing debt--you may be able to simplify your life, lower your payments and get out of debts on an accelerated timetable. It is important to understand that debt consolidation-debt relief differs from a debt consolidation loan, which requires you to put up your home or other asset as collateral in order to be approved.
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Credit Card Debt Settlement
When high interest credit card debt and high balance credit cards become overwhelming, and personal credit has already been impacted, many people decide that debt settlement is the debt relief option that is preferable. Under debt settlement, credit card companies, depending on your financial circumstances, may be willing to "forgive" or "settle" credit card debt for substantially less than you owe.
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Why would credit card companies be willing to settle with you? Particularly for individuals who are struggling financially and possibly even facing bankruptcy, credit card companies may be faced with the prospect of "selling off" what is considered "bad debt" for as little as ten cents on the dollar. If they understand how dire one's personal financial situation actually is, it stands to reason that they may be open to accepting a reasonable offer to settle debt made by you or by a debt settlement company working on your behalf.
Even though credit card companies have the right to take legal action against those who default on credit card agreements, and even though personal credit is affected negatively by debt settlement, this debt relief option has become more and more popular among those who want to pay back what they can afford to credit card companies -while avoiding bankruptcy, which has an even more severe impact on personal credit.
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