There are various reasons that make people accumulating debt on their credit cards. They might get laid off from their jobs or have illnesses that demand lots of costs. Credit card debt relief programs are designed to help you solving your financial issues because of some unfortunate circumstances. Many options are available to those in need, each with its own benefits and disadvantages.
Relief Programs for Credit Card Debt
Before you are choosing from the pool of credit card debt relief programs, it is suggested that you go to loan counseling agency. The agency will help reviewing financial situation, comparing program alternatives, and also propose the best solution. This service can be obtained for free as there are many not-for-profit agencies offering counseling sessions without charging. Counselors have also received certificates to aid borrowers. Moreover, agency does not give quick solution. It provides well-researched answer to your problem.
Here is the list of some credit card debt relief programs usually offered to borrowers in trouble.
- Debt Consolidation Plan
This plan is done to reduce interest rates on debt as well as managing multiple credit card balances to a single account. Because the market is highly competitive, borrower might find a consolidation plan with low interest rates. Some plans even offer 0% APR for the first months (length varies according to credit score). Nonetheless, this plan is not always an easy choice.
Not everyone is qualified for this plan, especially for those who have bad credit ratings. Some lenders also charge hidden fees such as for balance transfer and their services. Borrower with bad credit is often demanded to put in collateral to obtain loan. This is a quiet risky move.
- Debt Management Program
Debt management is one of the most recommended credit card debt relief programs. Borrower will make monthly payments to counseling agency. The amount is much lower than their normal payments. This is done after agency has reached agreement with card companies. The program will improve one’s credit score.
However, this program may take a long time, about three to five years. Counseling agency usually charges registration and monthly fees to borrower. If you bail out from this program, interest rates will go back to normal and fees for late payments might be demanded.
- Terms Renegotiation
It is one of the most popular credit card debt relief programs, although not always fruitful. Some credit card companies are willing to work with borrower to solve the financial issue. Borrower can request for lower APR to decrease the amount of monthly payments. Proposing for lump sum payment is also possible.
- Declaration of Bankruptcy
If other credit card debt relief programs do not work, this is the last option for you. There is a bankruptcy which will cancel the debt and another one that includes repayment program. It is suitable if borrower wants a new start and peaceful life. However, it will impact credit score badly. Cost for declaring bankruptcy can be quiet expensive because borrower needs to hire special attorney.
Hopefully, knowing all information about credit card debt relief programs will help you finding the best solution to your credit card problem.