Home Editor's Choice What debt elimination programs are available

What debt elimination programs are available


Excessive credit card debt affects the quality of life of millions of Americans. According to Javelin Strategy & Research, 28% of those surveyed said that they were finding it more difficult to pay-off their outstanding card balance. A debt elimination program can help to provide a new debt-free life.

There are several excellent debt solutions available. These include debt settlement programs, Debt Management Plans, chapter 7 bankruptcy and chapter 13 bankruptcy. Whilst a debt elimination program enables a consumer to become debt-free in a fraction of the time, it will have negative ramifications for personal FICO scores. However, those who have already made missed or made late payment will already have a lower credit score so may have little to lose and a lot to gain.

Debt Settlement Programs

This debt solution allows a struggling consumer to clear excessive credit card debt over a period of 12 to 36 months. Providers argue that this particular debt elimination program can write-off up to 50% of the amount owed through a negotiation process with creditors. It does involve offering creditors a monthly payment so a debtor will need some disposable income available to contribute towards the agreement.

Debt Management Plans

A very different debt solution to a debt settlement program, excessive credit card debt is managed rather than written-off. A Debt Management Plan (DMP) is a gradual debt elimination program based around making monthly payments more affordable. Whilst it can take longer to clear debt, it does help in terms of affordability and preventing further contact from collection agencies.

Chapter 7 Bankruptcy

Filing for bankruptcy under chapter 7 is a debt elimination program that doesn’t require a monthly payment to be made. It allows a struggling consumer to write off excessive credit card debt fully in just 4 to 6 months. Provided that income is below the state median and the debtor doesn’t have non-exempt assets (stocks and shares, luxury car etc), eligibility should not be an issue.

Chapter 13 Bankruptcy

Those who don’t qualify under chapter 7 bankruptcy may qualify under chapter 13. This potentially allows someone to restructure their debts and keep non-exempt assets in return for a monthly payment over a 3 or 5 year period. Excessive credit card debt will be written-off after this period elapses.

Choosing the right debt elimination program to clear excessive credit card debt is imperative. Always consult a qualified debt counselor before proceeding with any debt solution.

Guide to Eliminating Credit Card Debt

Eliminating credit card debt not only increases disposable income, it can feel like a real weight has been lifted from the shoulders of the borrower. The high interest and charges for missed/late payments mean that the cost of borrowing money is substantially higher than other prime credit alternatives. Although choosing to pay off credit card debt could create a greater financial burden in the short term, the reduction to cumulative interest means that it is a price well worth paying.

Eliminating Credit Card Debt with a Debt Relief Program

It is possible to pay off credit card debt with the help of a debt relief program. The two main ways to get out of debt are the debt management plan and the debt settlement program. These debt free solutions help to resolve money worries through a reduction to the debt burden and/or a lower payment to creditors. Each is a recognition that a change of personal circumstances often means that the borrower isn’t in a position to comply with the terms and conditions of the credit agreement and needs assistance.
Although there isn’t a reduction to the principal, the debt management plan helps a struggling borrower by making repayments more affordable. Given that lenders are normally prepared to freeze further interest and charges, it represents a better alternative than leaving the account in a delinquent state. The client makes a single payment to the intermediary, they take their 15% fee and the remainder is distributed to creditors on a pro rata basis. Eliminating credit card debt is achieved more gradually, but it is done so on better terms.

Get Out of Debt with a Debt Settlement Program

Unlike a debt management plan, it is possible to clear up to 50% of all unsecured debt. The client will send a monthly payment to the intermediary for a 12, 24 or 36 month period. However, the reduction to the principal (amount owed) will not take place until the final payment has been received by creditors. The debt settlement program is one of the most effective debt relief programs for eliminating credit card debt. It is often considered the leading alternative to bankruptcy for those who are able to repay some of their debt.

Successfully Eliminating Credit Card Debt

It is possible to get out of debt more quickly with a debt relief program, such as a debt management plan or debt settlement program. However, in order to get approval, the borrower will need to have already defaulted on his/her credit agreement(s). Although it is possible to pay off credit card debt in a fraction of the time, it will reduce the borrower’s credit score. This problem can be overcome by making a series of timely repayments now and in the future.