Credit Card Debt - Ways to Get Relief

Today, more than ever, many residents in North Carolina as well as in other states are searching for relief from their credit card debts. If you are also overburdened with credit card debts, there is help available - typically in the form of debt consolidation through credit counseling, debt settlement, or even bankruptcy.

With debt consolidation, the goal is typically to combine your multiple, high-interest credit card debts into one, more affordable payment made to a credit counseling agency to be distributed to individual creditors.

With debt settlement, however, the goal is to settle or negotiate with your creditors for significantly less than your actual debt amount. Both of these debt relief options have become more popular alternatives to bankruptcy which can have a more damaging and longer lasting impact to one's personal credit.

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Debt Consolidation - Can It Help You?

If you, like other North Carolinians, are struggling with high-interest credit card debts, you may be able to find relief through a process known as debt consolidation, or a debt management plan (DMP). The goal of debt consolidation, as mentioned previously, is to "consolidate" or combine your credit card debts and other unsecured personal debts - like medical bills, department store charges, or gas charges - into one, more manageable payment made to a credit counseling agency which in turn, distributes the funds to your creditors. If you may be considering debt consolidation, here is a typical scenario:

Debt Relief Counseling

A credit counselor will review your financial situation and debts, and assess your ability to pay off those debts. He or she will typically develop a game plan that may help you reduce your debts, then submit proposals (on your behalf) to creditors requesting reduced interest rates, elimination of any late fees and penalties - basically, asking for a more lenient repayment plan.

Creditors that accept the proposals are then added to the debt management program. By paying off your debts, hopefully, at a lower interest rate and at a more structured pace that you are comfortable with, you may reduce your debts sooner than if you kept paying just the minimum monthly payment on each of your credit card debts.

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Debt Relief Alternatives

While debt consolidation is a popular debt relief option, debt help may also come in the form of debt settlement services. Unlike debt consolidation through a credit counseling agency where consumers are responsible for paying the full amount of their debts, with debt settlement, they are hoping to settle for less than the full amount of their debts.

Debt Settlement - a Few Words of Advice

If you are considering enrolling in a debt settlement program, a few words of advice: In many cases, with debt settlement, consumers are advised to stop paying their bills and set aside money to make a reasonable settlement offer to their individual creditors. In cases like this, creditors may threaten to sue when consumers default on the terms of their credit card agreements. In addition, as consumers stop paying, they may be sued and their credit scores may decline.

In spite of the risks, debt settlement for credit card and other unsecured debt remains a popular alternative to bankruptcy, which is also a form of debt relief - but one that can have a more damaging and longer lasting impact to your personal credit.

The bottom line, if you may be considering enrolling in a debt consolidation program, or a debt settlement plan, make sure you understand how much money you could potentially save, how long it will take to realize those savings, and also how it can affect your credit score.

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