The demand for credit card debt free help has grown exponentially in recent years. According to the Federal Reserve’s G.19 report on consumer credit, the average level of revolving debt per household currently stands at $15,788. As with all statistics, averages disguise the fact that some families owe nothing and others owe $50,000 or more. Debt elimination services offer a popular way of dealing with credit card debt because a balance can be paid off far more quickly.
The Growing Need for Credit Card Debt Free Help
The high rate of interest, coupled with the tendency of heavily indebted families to make the minimum monthly payment, has extended the longevity of financial difficulties. Many people find it impossible to pay off unsecured debt more quickly because they don’t have sufficient disposable income. A debt free solution, such as a debt management plan or debt settlement program, can be used for dealing with credit card debt. The objectives are to achieve affordability, clear the principal faster and stop creditor harassment.
Debt Elimination Services for Dealing with Credit Card Debt
- Debt management plan. A qualified debt counselor will scrutinise personal finances in order to determine what is affordable. An intermediary will then negotiate with creditors to see if they are prepared to accept a reduced payment each month. Although under no legal obligation to do so under a debt management plan, the majority of creditors will be prepared to freeze further interest and charges. The lower monthly payment improves affordability, but can extend the longevity of the debt.
- Debt settlement program. Although reducing the repayments is a priority, the objective of this credit card debt relief program is to reduce the principal by up to 50%. The remaining balance will be repaid over a period of 12 to 36 months with a debt settlement plan. The final debt reduction won’t take place until the final payment has been made. The fee is normally 15% for both debt free solutions.
Credit Card Debt Free Help from Filing Bankruptcy
Filing chapter 7 may be the most effective way of dealing with credit card debt. Although this debt free solution will show on a credit report for a period of 10 years, it will lead to the elimination of debt in just 4 to 6 months. It is the preferred option of consumers who are unable to offer creditors a monthly repayment, have an income that is below the state median and have no non-exempt assets. Although the individual can file without help, the majority of consumers choose to hire a bankruptcy attorney to ensure that the process is dealt with professionally from start to finish.
Doesn’t a Debt Free Solution Lead to a Lower Credit Score?
Debt elimination services involve defaulting on one or more credit agreements so this could lead to a credit score reduction. In practice, the majority of customers have already defaulted on their credit agreements. Credit card debt free help could lead to a better credit rating because creditors are receiving a repayment on what may have once been a delinquent account. The level of debt is also the second most important FICO score determinant so a fresh financial start will help considerably. With the exception of chapter 7 bankruptcy, poor credit shows on a credit report for a maximum period of 7-years.