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Information and Advice on Help with Credit Card Debt

I have a substantial amount of credit card debt. What would be the best option for me?

I have a substantial amount of debt (credit card) and am interested in getting just one payment. What would be the best option for me? I don't own a home but I have a decent credit score.

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Bill's Answer
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If you do not own a home, I can only think of two main options for you, namely Consumer Credit Counseling (CCCS) or a Debt Settlement program. But each of them has an effect on your credit one way or the other. If you are looking to keep your credit intact then the only way to get a single payment on your credit cards is to get a personal unsecured loan for the amount. There are limitations to the total amount a bank will disburse as an unsecured loan and the interest rates would not be substantially lower than your credit cards. Either way, this is the option to pursue if you do not want to hurt your credit.

Now for your other options. The four primary concerns for most consumers are:

  1. Monthly payment
  2. Time to debt freedom
  3. Total cost
  4. The credit rating impact of the consolidation program

Be sure to evaluate each program, relative to your prioritization of these factors. Here is how each of the two programs work:

Credit Counseling

Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts — but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan DOES show up on your credit report… and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy — or using a third party to re-organize your debts.

Debt Settlement

Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 bankruptcy. The trade-off here is a negative credit rating versus saving money.

I suggest that you get a free consultation from one of our preferred debt help partners to explore your options in more detail and also to get more information. You can do so by filling your information at: Debt Relief Savings Quote.

I hope the information provided helps you Find. Learn. Save.

Best,

Bill

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4 Comments

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  • BA
    Jun, 2008
    Bill
    Talk to your individual creditors about hardship-based relief options before you decide to just stop the payments. Most creditors will take a look at your overall situation and in all likelihood, be willing to work with you.
    0 Votes

  • 35x35
    Jun, 2008
    Mike
    Bill, I am terrified. I have $93,000 in credit card debt. Most of it rolled over and over. Now I have recently rolled a lot of it over and into very low-interest accounts. I own a home and a car. I need to lower my monthly payments. I contacted CCCS and they advised that they can reduce the interest rate But my interest rates are low as they are. I just need some additional time to pay. My credit score is around 750 and I did not want to have to file bankruptcy. I called the Freedom Debt Relief and they advised that since my debts are entirely with one lender and this lender is notorious about NOT working with anyone they could not help. I consulted a bankruptcy atty and he said that since I had recently rolled one of the debts into a zero interest until Feb, the creditor would not allow for a discharge, it would look like fraud....Bill...what in the world can I do.....PS he did tell me to just stop paying and see what they do...they would most likely garnish my wages and put a lein on my home..Frankly this is not a healthy option for me mentally or financially.....Bottom line is that I owe the money, I want to pay this off, I will be working a second job to do so but I would need a reduction in amount to be paid each month. Help
    0 Votes

  • BA
    Jun, 2008
    Bill
    We evaluated Freedom Debt Relief and here is what we found: They are one of the largest and appear to be one of the most established players in the debt relief field. They work directly for the consumer, and do not receive any compensation from the creditor (which is how many alternative credit counseling firms work, where they get kick-backs from the credit card companies to get you to pay your debts back). They are members of the Better Business Bureau, and have been members for many years. The founders appeared in the press and news as consumer finance resources in places like the New York Times, LA Times, CNN, Stanford Business School Magazine, La Opinion and many others. They are saving millions in credit card and other unsecured debt for their clients every month.
    0 Votes

  • 35x35
    Jun, 2008
    Mike
    I am bewildered and confused. I am seriously in debt. I have looked on line at the debt negotiation/settlement firms. How do I know if they are indeed legit. ....help...Mike
    0 Votes

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