Need Credit Card Debt Consolidation?
Many residents of Arkansas, as well as consumers across America, often find that unexpected events (such as unemployment or medical bills) have contributed to unmanageable credit card debt. They find themselves caught in a cycle of debt that's difficult to escape. As a result, more and more consumers are searching for the optimal way to pay off credit cards. This is why the options to consolidate credit card debt, and even taking out credit card debt consolidation loans, have become popular methods to pay off high interest credit card debts.
It is apparent that in today's world, a lack of financial discipline and overspending on credit cards have become major sources of debt and stress for many individuals and families. Visa, MasterCard, Discover, Capital One, Chase, Citi card, and many other credit cards can be very convenient and tempting to use, but when money gets tight, and you can't get out from under your high-interest, monthly credit card debt, a unexpected financial crisis can be detrimental.
It's true that many people who can't pay down credit cards have experienced a financial or family hardship, and they may have no choice but to use high interest credit cards to pay for life's essentials, such as food, medicine and maybe even utility bills. Instead of feeling desperate or guilty, consumers who find themselves in this difficult situation should take comfort in knowing that good people often get into debt for a variety of reasons, and help is available through a variety of credit card debt consolidation or debt relief hardship programs.
If you are in need of debt relief assistance due to high credit card debt or a financial hardship, see how debt relief could help you: Get a free debt relief evaluation and savings estimate today.
How Does Credit Card Debt Consolidation Work?
A credit card debt consolidation program is meant to combine, or "consolidate," all of your high interest credit cards and other unsecured debts into a single, more manageable monthly payment. For individuals and families struggling to take control of their finances, these debt consolidation or debt management plans (or DMPs) can help bring much needed relief from high interest rate debts, late fees, and penalties. A debt consolidation program can also provide a proven and predicable path out of debt for those who have the discipline to stop using credit cards and pay down their debts according to a monthly schedule. These programs aren't the "magic bullet" to credit card debt payoff, but they can be quite effective. DMPs may even save consumers thousands of dollars if they have the knowledge and discipline to end the cycle of debt.
To find out if credit card debt consolidation could help you save money and resolve your debt in a reasonable period of time, get your free debt relief analysis and savings estimate now.
Generally, credit card debt relief or debt management plans are coordinated by a credit counseling service. The credit counseling company will speak briefly with consumers to try to better understand the hardship being experienced, how much actual credit card debt the consumer has and how much money the consumer can realistically set aside each month to pay down or pay off credit cards and other unsecured debts.
The credit counselor or debt counselor will then take the information gained from these interviews and formulate a payment strategy that will work well for the consumer. Counseling services will also propose that creditors lower interest rates on credit debt, and possibly waive any late fees and penalties. Those creditors who accept the proposals are then added, one at a time, to the debt management plan (DMP). For consumers who benefit from lower interest rates, and stay on course with the debt management program by paying off the existing principal amount of credit cards, the savings as compared to paying monthly minimums for years and years can be quite substantial.
Know Your Credit Card Debt Relief Options
Credit card debt consolidation (also known as credit counseling or debt management) programs are not the only debt relief options. Other debt relief choices include personal debt consolidation loans, debt settlement, or even the debt relief option of last resort, bankruptcy.
The intention of a credit card debt consolidation loan is to "consolidate" or combine several high interest rate debts into a single, lower interest rate loan. Certainly debt consolidation loans have their place and they have been able to help many consumers. However, it's important to know that a credit card debt consolidation loan typically requires the consumer to put up their home or other asset as collateral, and the consumer could lose their collateral should they fail to adhere to the terms of the loan.
Turning unsecured debt such as credit cards into secured debt that puts your home at risk may be a hazardous course of action. In addition, it's a sign of the times that many consumers who take out debt consolidation loans do indeed use the proceeds of the loan to payoff credit card debts, but unfortunately end up compiling a whole new mass of credit card debts. Now, the consumer has to pay off the debt consolidation loan and the additional credit card debts. In this scenario, the debt consolidation loan has only intensified their debt crisis.
Find out if you can get credit card debt relief without a loan. Get your free debt relief analysis and savings estimate today.
If you are looking for another option to debt consolidation loans, debt management plans, or credit counseling, debt settlement, also known as debt negotiation, is another increasingly popular debt relief option worth exploring. Keep in mind that debt settlement differs from debt management. The goal of debt management through credit counseling is to pay off the full amount of debts over time at a reduced interest rate, while the goal of debt settlement is to "settle" with credit card companies for substantially less than the full amount owed. Debt settlement is usually an option that consumers with high credit card debts ($20,000 or more) may consider as a viable alternative to personal bankruptcy.
Consumers can potentially save a substantial amount of money with debt settlement. It is a more intense form of debt relief program that generally encourages consumers in distress to redirect the funds they would normally be paying to credit card companies, thus allowing them to accumulate the monies necessary to extend a settlement offer to creditors. When consumers use this strategy of building up a settlement fund, instead of paying according to cardholder terms, creditors have the legal right to threaten and take legal action in order to recoup their losses and to discourage consumers from going this route.
Debt settlement or debt negotiation has legal implications, but any amount of money that the consumer saves through a negotiated settlement is also subject to taxation. Even when consumers know about the legal and tax implications of debt settlement, it is still an increasingly popular debt relief option for those who are going through financially tough times and need to settle their debts for a reduced amount, rather than file for bankruptcy and walk away from their debt entirely.
Credit card companies might be motivated to settle with consumers, and here's why: For those consumers who fall seriously behind in payments, credit card companies may often "sell off" the debt to a third party collector for as little as 10 cents on the dollar, therefore creditors may be willing to accept a reasonable settlement offer from consumers rather than get little or nothing if the debt is "sold off," or the consumer files for personal bankruptcy. It's important to note that when consumers stop paying creditors according to terms, credit scores will be lowered, but the impact on personal credit with debt settlement is normally not as severe or long lasting as bankruptcy.
To determine if debt relief can help you, get your free debt relief analysis and savings estimate.
State Programs and Financial Assistance
Debt relief programs have been known to help many Americans during financially challenging times, but some consumers may need more immediate relief, such as help paying for rent, utilities, child care or even buying groceries. The state of Arkansas has a variety of financial assistance programs available, such as the Low Income Home Energy Assistance Program (LIHEAP), Medicaid, ARKids First! Program, which provides affordable health insurance for children, and a variety of food assistance programs. To learn more, visit the state of Arkansas' official Benefits page.
It's important to remember that here is help available if you are overburdened with high interest credit cards and other unsecured debts. While debt relief won't make debts magically disappear, it is important that consumers evaluate and compare all of their debt relief options, get help from BBB-accredited debt relief providers, and make a bona fide effort to pay down credit cards and other unsecured debts on an accelerated program. You do not have to live your life in debt. You can put your debts in check and begin to experience financial freedom, but first you must choose not to allow debts to control your life!