Will Credit Card Debt Consolidation Help You?
If you're like many residents of Louisiana as well as individuals and families across the country, you may find yourself facing credit card debt that has become unmanageable and financially damaging. Unfortunately, this can lead to a cycle of debt that's hard to escape. You may be like many consumers who are searching for a proven and effective way to pay off high interest credit card debt and save money in the process with the help of a debt relief plan. This is the reason why credit card debt consolidation, and even credit card debt consolidation loans, have become increasingly popular strategies to pay off high interest credit card debts.
Certainly overspending on credit cards due to financial setbacks that occur, or simply due to lack of money management skills, has become a major source of debt and stress for many citizens of Louisiana. Credit cards such as Visa, MasterCard, Capital One, Chase, Citi card, Discover and many others are all too easy and tempting to rely on, but when times get rough, and you can't seem to escape high-interest revolving credit card debt, a serious financial crisis can hit you and, before you know it, the reality of high interest revolving debt is clear: It can be hard to get by just day to day, nevermind accomplish the goal of saving money to prepare for the future.
Again, it's important to recognize that many people who can't pay down credit cards have suddenly been faced with a financial or family hardship. They may have little choice other than to turn to high interest credit cards to pay for the essentials of life such as food, medicine and maybe even utility bills. Consumers in this hardship situation should not feel a sense of despair or guilt. Instead, they should take comfort in knowing that many good people, often through no fault of their own, get into debt for a variety of reasons. The good news is, debt relief assistance is available through a variety of credit card debt consolidation or debt relief hardship programs. But, the first step is for the individual or family in debt to first decide that you want to do all you can to put debts behind you and get on the path where debts don't rule your life or determine your future.
If you are in need of debt relief as a result of high interest or high-balance credit card debt or a financial hardship, take a moment to find out how debt relief could help you, get out of debt, save money, and get on a firm financial footing. Get a free debt relief evaluation and savings estimate today.
How Do Credit Card Debt Consolidation Programs Work?
A credit card debt consolidation program is designed to combine, or "consolidate," each of your high interest credit cards and other unsecured debts into one, more manageable payment each month. For individuals and families in Louisiana struggling to find a way to control their finances, debt consolidation or debt management plans (DMPs) can provide much-needed relief from high interest rate debts, late fees, and penalties. A debt consolidation program can also provide a path out of debt that is both proven and predictable. As effective as the consolidation plan can be, it does not make debts magically "go away". It is truly designed for those individuals and families who have the discipline to stop using credit cards and pay down their debts by adhering to a monthly schedule. These programs aren't the "magic bullet" to credit card debt relief, but they can be quite effective. They may even save thousands of dollars for those who have the discipline and wisdom to put the cycle of debt behind them. In addition, it's always wise for consumers to pay down the principal amount of their debt and, in doing so, they will see their debt-to-available-credit ratio improve – which can be a positive for credit standing.
Typically, a credit counseling company has the task of customizing credit card debt relief or debt management plans for consumers. How is this accomplished? Typically, the debt relief provider will conduct brief interviews with consumers to get a clear understanding of the hardship being experienced, just how much in total credit card and unsecured debt the consumer has and how much money the consumer can reasonably afford each month to pay down or pay off credit cards.
The credit counselor or debt counselor then can glean from the information provided in these interviews and create a debt consolidation plan and strategy that fits the consumer's current situation, income, and budget. Then, with this information, the debt relief provider can then submit proposals to creditors requesting that they lower interest rates on credit debt, and possibly waive any late fees and penalties -- and generally provide more favorable repayment terms to financially-distressed consumers. Those creditors who agree to the proposals are then added, one by one, to the debt management plan (DMP). For consumers who are granted the benefits of debt relief due to the hardship they are experiencing, and then follow the debt management plan by paying off the existing principal amount of credit cards – the savings, as compared to paying monthly minimums at higher interest rates for years on end, can be quite substantial.
Alternative Credit Card Debt Relief Options
Credit card debt consolidation (also commonly referred to as credit counseling or debt management) programs are not the only debt relief option available to consumers in need of debt relief assistance. Other debt relief choices include personal debt consolidation loans, debt settlement, or the debt relief solution of last resort, bankruptcy.
What is the goal of a debt consolidation loan? Typically, credit card debt consolidation loans are intended to "consolidate" or combine multiple high interest rate debts into a single, more manageable, lower interest rate loan. There is no question that debt consolidation loans have their place and they have been able to help many people looking to consolidate high interest debts. However, it's important to recognize that credit card debt consolidation loans normally require that consumer put up their home or other asset as collateral. And should the borrower default on the terms of the consolidation loan, they could risk losing their home or other asset that was used as collateral.
Turning unsecured debt such as credit cards into secured debt that may put your home at risk is something that should be carefully considered before moving forward. In addition, it is important to understand that many consumers who take on debt consolidation loans do use the proceeds of the loan to payoff credit card debts as planned but, unfortunately, they may amass a whole new round of credit card debts. It's easy to see why, in this situation, the debt consolidation loan, far from being the answer to a debt crisis, has actually contributed to the situation becoming far worse.
Find out if you can get credit card debt relief without a credit card debt consolidation loan. Get your free debt relief analysis and savings estimate today.
Debt Settlement Option
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, however, that debt settlement differs significantly 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 (typically an option that is more applicaable to consumers with high credit card debts of $20,000 or more) is to "settle" debts for substantially less than the full amount owed. Settlement is considered a viable alternative to personal bankruptcy for those who would prefer to pay a lump sum settlement rather than face the prospects of defaultiing entirely on their debt and having to file for bankruptcy.
Consumers may be able to save a substantial amount of money with debt settlement. It is considered a more aggressive form of debt relief program that typically encourages consumers in distress to redirect the funds they would normally be paying to credit card companies, thus providing a way for them to build up the funds necessary to make a settlement offer to creditors. When consumers utilize this plan of building up a settlement set-aside amount, instead of paying according to terms of their cardholder agreement, creditors may threaten, or take, legal action in order to recoup their losses and to discourage consumers from following this course of action.
Another important point to consider regarding debt settlement or debt negotiation is the fact that there are tax consequences to debt settlements: The amount of money that is saved as a result of a successful settlement, which can be quite substantial, is subject to federal taxes. Despite the potential legal and tax implications of debt settlement, the debt settlement, or debt negotiation, option has been increasingly popular for consumers who are going through a difficult financial hardship and want to do their very best to settle their debts for what they can realistically accumulate. Even if this is a significantly reduced amount, they would rather pay what they can save up to creditors, rather than walk away from their debt entirely and file for bankruptcy.
What might be the motivation for credit card companies to agree to settle with consumers for considerably less than the full amount originally owed? For those consumers who fall seriously behind (60-90 days or more) in payments, credit card companies may often choose to "sell off" the "bad debt" to third party collectors for as little as 10 cents on the dollar. Thus, creditors, in this situation, may be willing to accept a reasonable settlement offer from consumers in distress rather than recoup little or nothing if the debt is "sold off," or the consumer is forced to file for personal bankruptcy. Another important item to note regarding settlement: While credit scores will be negatively impacted when consumers cease paying down credit cards according to terms of their agreement, the overall impact of debt settlement on personal credit is typically not as serious or long lasting as bankruptcy.
State Financial Assistance
Some individuals and families, regardless of their credit card debt or financial situation, may need more immediate help from other sources to pay for the basic essentials in life -- such as help paying for utility bills, rent, groceries, and childcare. To help individuals and families experiencing a genuine financial hardship, the state of Louisiana sponsors programs such as the Louisiana Family Independence Temporary Assistance Program (FITAP), Louisiana Head Start, and the Supplemental Nutrition Program or SNAP, among others. To find out more, go to the state's homepage Benefits section.
Explore Your Debt Relief Options
If you or your family is overburdened with high interest credit cards and other debts, be aware that help is available and understand that good people get into debt for a variety of reasons. Whether you take control of debts yourself, practicing better budgeting and money management skills, it is important to do all you can to avoid the in-debt-for-life trap that can so easily trap individuals and families who need their hard-earned money to go toward things worthwhile – rather than service high-interest debt that supports credit card companies. A structured debt relief plan may be the answer if followed faithfully. While debt relief won't make debts magically disappear, it is important that consumers evaluate and compare all of their debt relief options, consider getting help from BBB-accredited debt relief provider, and make a genuine and persistent effort to pay down credit cards and other unsecured debts according to a set and predictable schedule. Finally, recognize that you do not have to live your life in debt. You can take control of your debts and pursue and life of prosperity and financial freedom. It all begins with your decision to not allow debts to control your life and your future!
Discover how debt relief may help you by requesting your free debt relief analysis and savings estimate today.