When the idea of one more past due warning inside your mail makes you lose sleep, you may well be ready to consider your options for debt reduction or elimination. Debt settlement programs, consumer credit counseling and chapter 7 or chapter 13 bankruptcy are each strategies to decrease or get rid of your debt. Each method has negative and positive characteristics you need to learn before deciding how you will get rid of your credit card debt. A bankruptcy attorney may be the best person to help you sort out your options.
Settling a personal debt typically involves paying a large part of the balance in a single payment. If you pay the agreed upon sum, your lender consents to eliminate the remainder of the account balance. For a person who is unable to make minimal installments, this isn’t always feasible. If you have to skip regular payments to save the money for your settlement, you may find yourself faced with a lawsuit that result in wage garnishment.
By working with a credit counselor to reduce your personal debt, you could get debt collectors to lower your annual percentage rates. Credit counseling is a lot like Chapter 13 bankruptcy in that it entails negotiations on terms in addition to prolonged monthly payment agreements. Be careful before entering into an agreement through a credit counselor if you aren’t sure you’ll be able to make the required payments. If you default, the creditors will likely cancel your deal and resume your higher interest rates.
In cases where a debt settlement program and consumer credit counseling don’t appear like they are going to improve your debt issues, personal bankruptcy could be a good option for you. Depending on your income, you could potentially be in a position to have your credit card debt, personal loans and medical obligations wiped away without having to pay any of the balance. Like the other debt elimination options, however, this one comes with downsides.
Getting credit with reasonable rates can be very difficult for years after you file for bankruptcy because the notation will remain on your credit report for 10 years.
