Credit Card Debt Elimination

Information you should know when seeking credit card elimination or credit card reduction.

Debt elimination describes a variety of different options consumers have available to help them eliminate debt. Typically, when speaking of debt elimination, one is referring to one of the four main options:

Debt Consolidation – Consumer credit Counseling

These two terms are typically used to describe any program in with a company will negotiate lowered interest rates on your credit cards and unsecured debts. When an individual enrolls in a debt consolidation program, they will make one monthly payment to the consolidation company. It is then the responsibility of that company to disburse payment to creditors according to pre-established agreements. Consolidation companies can lower your interest to between 8-20% depending on the creditors and account history.

Debt consolidation is often ideal for individuals with less than $10,000 of total unsecured debt. Consolidation companies can lower an individual’s monthly payment by up to 50%.

Most consolidation companies charge an initial administration fee that varies in price depending on the debt and then charge a monthly maintenance fee from $30-$50 on average.

Debt Settlement – Debt Negotiation

Debt settlement involves negotiating lump sum payments to creditors in order to settle an account for 25-60% of the total balance. Debt settlement involves negotiating the outstanding balance of the account, not just the interest. A debt settlement company can organize a payment plan that will allow clients to make one monthly payment of up to 50% of his or her current payments. While the client is saving monthly, the settlement company will be responsible for contacting and negotiating with creditors. Once the client has enough available funds to settle an account, the settlement company will finalize the agreement. 30-60 days following the payment, the creditor will release a “Paid in Full” letter stating that the account was paid satisfactorily.

Debt Settlement is an aggressive and innovative debt elimination technique that should be used as an alternative to bankruptcy. Debt settlement is a great bankruptcy alternative for individuals with $10,000 or more in unsecured debt.

Debt Settlement companies are either paid a commission based on the amount of money they save the client or a flat fee based on the total amount of debt. A typical commission is between 15-35% of the amount save, depending on the administration fee they may or may not charge upon entering the program. Those negotiation companies that charge a flat rate may not charge more than 15% of the total debt entered into the program.

Types of Bankruptcy

Bankruptcy is considered to be the most drastic debt elimination option, and most people try to avoid filing as much as possible. Although there are a number of different types of bankruptcy, the most common two for consumers are Chapter 7 and Chapter 13.

Chapter 7

Chapter 7 is considered a “Clean Slate” Bankruptcy and is the more severe of the two. Clients filing Ch. 7 bankruptcy must be submitted to a means test that will determine their eligibility. Upon approval, the individual will be assigned a court-appointed representative to determine which of the filer’s property is to be auctioned off to pay back creditors (Each state has a list of exempt and non-exempt property along with exemption limits). Once the individual’s assets have been exhausted, the courts will absolve him or her of any legal responsibility to pay the remaining debt. Even though the individual may be forced to sell some of their property, he or she will be completely free of unsecured debt at the end of the process. It is important to note that secured debt including car payments, mortgages, alimony, child support, taxes, student loans, as well as court ordered fees can not be erased by the process.

Chapter 7 is best for individuals who are making less than the state average income and who are not able to afford a debt consolidation or debt settlement program.

The current bankruptcy filing fee is $299.00 for Chapter 7. This value is subject to change and does not include attorney fee. It is recommended that individuals hire a bankruptcy attorney to avoid any mistake when filing for the bankruptcy. Attorneys’ fee rate from $200-$300 per hour on average, but this price can vary according to location and the individual attorney.

Chapter 13

Chapter 13 bankruptcy is considered the “Working Man’s” bankruptcy. With the help of the court, individuals must construct a structured partial repayment plan to pay back their creditors. On average, an individual will pay back between 30-50% of their total debt over a 3-5 year period. In return for paying back a percentage of their unsecured debt, individual who file Chapter 13 are allowed to retain a greater amount of their assets and can help avoid foreclosures and evictions from homes. Just is the case for Chapter 7, Chapter 13 does not erase secured debts such as mortgages, car payments, student loans, or other debts such as taxes, alimony, child support, and court-ordered fees.

Chapter 13 is best for individuals who are working and earn more than the state average income but who can not afford a debt consolidation or debt settlement program.

The current Chapter 13 bankruptcy filing fee is $274.00. This value is subject to change and does not include attorney fee. It is recommended that individuals hire a bankruptcy attorney to avoid any mistake when filing for the bankruptcy. Attorneys’ fee rate from $200-$300 per hour on average, but this price can vary according to location and the individual attorney.

Home Equity or Refinance Loan

Many consumers turn to different resources for credit card debt elimination when faced by continuous accruing debt. Some people look to their homes as a means of salvation. They prefer to replace their high interest credit card or personal loan debt with loan-interest home equity or refinance loans that range between 5-12% on average.

A refinance involves reorganizing one’s entire mortgage loan, based on the entire value of the home. This is often ideal if interest rates have dropped. The refinance process is more lengthy and costly than a home equity loan, but provides interest rates that are several interest points lower.

A home equity loan is based solely on the equity one has in his or her home. These loans are often simple and low-cost, requiring minimal paperwork, but they are accompanied by interest rates that are higher than those of mortgage loans.

These loans are ideal for individuals who might be able to save significantly by lowering their interest rates or, in the case of the refinance, are able to lock in a lower interest rate. These loans are best for individuals not at risk of falling back into debt, as one is converting unsecured debt into secured debt that has resulted in many consumers losing their homes.

Credit card elimination is possible when you apply smart and legal ways available through true knowledge of the financial system. A trust worthy debt help service can assist you and let you save thousands of dollars in credit card debt through credit card debt elimination, or credit card debt reduction in very simple and easy to follow steps.

To get free counseling on how to get credit card debt elimination , drop us a line using the form below, or call us today at 1-866-892-5132, and we can personalize a debt relief program for you that will help eliminate up to 65% of your unsecured debt while protecting your most valuable assets.