In a lot of cases, considerable damage has been done to their financial reputations by the time people fully come to grips with the idea they need to seek credit card debt relief help.
The key is recognizing the signs before the problem becomes too big to handle easily. Ideally, this means seeing it coming and doing something about it before your credit score is affected negatively. This makes find the absolute best credit card debt relief help more doable, as the better options depend upon you having a strong credit score.
Forms of Credit Card Debt Relief to Consider
Respite can come in a variety of different forms. The most common include debt consolidation, credit counseling, debt management, debt settlement, and bankruptcy protection.
Each has its pros and cons, so let’s take a look at each.
Combining your credit card obligations into one monthly bill can make them much easier to manage. It can also render them less costly and help you pay them off in a shorter amount of time. This can be accomplished in several different ways. These include credit card balance transfers, personal debt consolidation loans, home equity loans and home equity lines of credit.
While all can reduce multiple credit payments to just one monthly, each option has different ramifications.
- Credit Card Balance Transfers generally come with some sort of incentive — such as zero percent interest for a certain window of time — if the entire transferred balance is paid off within the prescribed period. However, you could find yourself looking at an even higher interest rate if you miss that window, so it’s best to be certain you can clear up the entire transferred amount in the time allotted.
- Personal Debt Consolidation Loans accomplish the same goal. However, you’ll forego the interest incentive, and instead, you’ll get a much lower rate across the board, that is assuming your credit score is strong enough to convince a lender to afford you a signature loan without collateral.
- Home Equity Loans and Lines of Credit can be the least costly of these options in terms of the interest you’ll pay. However, you’ll put your property up as collateral to secure one of these loans. This means that a default could cost you your home. Choose this option only when you know you’ll be able to meet the stipulations of the loan agreement to the letter.
Credit Counseling/Debt Management
These two typically go hand in hand because credit counselors often recommend debt management programs when the situation is one in which it is determined resolution will require professional help.
Credit counselors review your income, expenses, and obligations to try to help you rearrange things to make paying your bills less difficult. If this proves unworkable, debt management involves contacting your creditors to request fee waivers and interest rate reductions in exchange for agreeing to let an intermediary (usually the credit counselor) manage your repayment process. The advantages here are the outside assistance and financial concessions. However, you’ll surrender control of your finances to a large extent, and you’ll be forced to close credit accounts while you’re in the program.
This form of the best credit card debt relief functions largely similarly to management, with one key difference: interest and fee concessions will be sought from your lenders, in addition to forgiveness of a portion of the principal amounts owed. Individual card issuers will often agree to these in exchange for a one-time payment of the full negotiated balance.
This means you’ll need to save the money you would have been using to service the debt until you’ve accumulated enough cash to satisfy an agreement in full. Debt settlement organizations like Freedom Debt Relief have mechanisms in place to facilitate this. However, as you can imagine, your credit score will take a hit when you stop sending your lenders money every month.
This will likely be your best form of credit card debt relief help if all the above fails and you’re absolutely unable to pay. However, this option should be given careful consideration. Turning your back on all your creditors means your credit report will carry that notation for up to ten years.
Ultimately, finding the best credit card debt relief help is a matter of taking stock of your situation and applying the solution most suited to your circumstances — as early as possible. The sooner you attack the problem, the broader and less injurious your range of options will be. While there are lots of ways to go, the key lies in examining them carefully to ensure you avail yourself of the least abrasive one your condition permits.