Debt Settlement and Debt Relief
Credit card debt has many residents in North Carolina as well as in other states looking for debt relief. If you are also struggling with credit card debts and have fallen behind on your payments, there are several ways to get debt help. One proven debt relief option is debt consolidation, where you typically combine your high-interest credit card debts and other unsecured debts into one, more affordable, and more structured payment made to a credit counseling agency.
Another alternative is debt settlement. When you enroll in a debt settlement program, you are hoping to settle or negotiate with creditors for a reduced amount of your credit card debts. These days, both debt consolidation and debt settlement have become popular alternative plans to bankruptcy which is also a form of debt relief - but one that can have a more devastating and longer lasting impact on personal credit.
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How Debt Settlement Works
Many consumers who are overburdened with credit card debt may consider debt settlement which is a process where they hope to settle or negotiate with their creditors for (generally) significantly less than what they owe.
If you are considering debt settlement, a few words of advice: As the term implies, credit card companies are certainly not legally required to "settle" or accept your settlement proposal. In many cases, you will be advised to stop making payments on your credit cards to accumulate funds over a period of time to make a reasonable settlement offer.
In these cases, creditors may threaten to sue if you default on the terms of their credit card agreements. In addition, if you default on the terms of your credit card agreement, you may typically see your credit score decline. However, in spite of the potential risks, debt settlement remains a popular alternative to bankruptcy - which can have a more serious and longer-lasting effect on your personal credit.
Debt Consolidation or Debt Management
As noted earlier, if you are struggling with debts, you may also find relief through a process known as debt consolidation, or what's sometimes referred to as a debt management plan (DMP). Debt consolidation typically involves consolidating or combining your multiple high-interest credit card debts, into a single, more affordable, monthly payment made to a credit counseling agency.
Consumers who enroll in a debt management plan talk to credit counselors that will review their finances and debt situation. Once they have all the financial information that they need, credit counselors will typically make proposals (on a consumer's behalf) to creditors requesting a reduction of interest rates, or the waiving or elimination of any late fees and other penalties.
Creditors that agree to the proposals are entered into the debt management plan. It's important to understand that while it is the credit counseling agency's responsibility to disburse funds to creditors, it is your responsibility to make sure that you have money available in the account set up for your consolidated monthly payment. Reputable credit counseling agencies may even provide you with a due date (the date that they draw money from your account) that takes into consideration, for instance, when you get paid or have the funds available in the account.
The bottom line is, if you are struggling with debts and need to settle them, there is help available. The smart thing is to do your due diligence to understand all your debt relief options.
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