What are Consolidated Credit Card Debt Programs?
Millions of people are having a difficult time paying their credit cards in today’s economy. They are looking for credit card debt consolidation without bankruptcy. In fact, if you live in California or New York, you probably are having a harder time than if you lived in another part of the country. The average consumer on the west coast carries credit card debts of more than $20,000 and on the east coast, consumers carry just slightly less debt of approximately $19,000. With the difficult economy, credit card debt continues to be an ongoing problem for many families. As an answer to juggling multiple monthly credit card payments and simply not having enough money in the monthly budget to pay all of your expenses, consolidated credit card debt programs might be a good alternative to bankruptcy.
What is Credit Card Debt Consolidation?
Debt consolidation is not a new concept. With a consolidated credit card debt program, you are able to make one single-monthly payment for your accounts, rather than multiple payments for numerous credit cards or other types of unsecured debts. Consolidation programs do not eliminate your debts. Instead, they make your financial obligations more manageable. Additionally, many credit card consolidation programs reduce your monthly payments. This also provides you with additional money in your budget to pay off other debts. Many consumers find that credit card debt consolidation gives them a sense of relief and reduces the stress of juggling their budgets every month.
How Does Debt Consolidation Work?
Our credit card debt consolidation program differs from programs offered by many debt relief companies. Instead of recommending debt consolidation loans, our program allows you to use your own money to pay off your debts. Instead of going further into debt with a debt consolidation loan, you make regular monthly deposits into your account. In turn, we make payments to your credit card companies on your behalf. This allows your payments to be made on time and avoids missed payments.
Credit Card Debt Consolidation in Conjunction with Other Debt Solutions
Credit card debt consolidation programs alone will not decrease your ongoing credit card debt. The most effective approach to credit card debt relief is to combine consolidation programs with debt negotiation and settlement. Our qualified credit counselors will work on your behalf to communicate and negotiate with your credit card companies to lower your financial obligations to them.
Our debt relief counselors are skilled in working with credit card company decision-makers to reach agreements for workable settlements for your accounts. In most cases, by working on your behalf, we are able to reduce your credit card debt by up to 50 percent. Negotiated debt settlements often include a number of concessions from credit card companies, including reduction or elimination of accumulated fees, decreased or eliminated interest rates, lump sum payments and decreased principal amounts.
What Debts Qualify for Debt Consolidation?
Credit card debt consolidation programs are available for almost any kind of unsecured debts. These debts may be personal or business related and include a wide range of qualified debts, which are regulated by law.
Qualified unsecured debts include:
• Credit Cards
• Cash Advance Loans
• Lines of Credit
• Medical Bills
• Payday Loans
• Personal Loans
• Collection Bills
• Business Debts
Certain debts do not qualify for debt settlement or consolidation. These debts include:
• IRS Debts, Including Back Taxes
• Student Loans
• Government Loans
• Auto Loans
• Home Loans
• Utility Bills
• Any Other Secured Debts
How Does Credit Card Debt Consolidation Affect Your Credit Scores?
If you do nothing and continue to struggle to make monthly credit card payments, your credit score will likely decline due to missed or late payments. Some credit card companies also now routinely raise interest rates if you are late with payments or miss a payment. As a result, in addition to reporting these payment problems in your credit report, you may also find yourself paying excessively high interest rates, making monthly payments even more difficult to manage. This can trigger a downward spiral for your credit score that may be difficult to recover from without any concentrated effort on your part.
Working with a professional credit counseling organization will initially impact your credit report negatively, since it is reported to credit reporting agencies. However, your credit score will often begin to recover quickly as payments are made to credit card companies when they are due and are not missed.
Since the entire credit card debt settlement and consolidation process usually takes approximately 24 to 48 months for most consumers to complete, you may find your credit score dramatically improving as you pay off your debts.
Overwhelming credit card debt can be financially devastating and stressful. By turning allowing your qualified professional credit counselors to work on your behalf, you can reduce your debt and your stress levels too. With dedication and commitment, you can find yourself on the road back to financial health. If you believe you would benefit from our debt relief solutions, give us a call today or fill out the form for a free debt analysis and allow us to help you.
As far as debt management goes, bankruptcy is as low as you can go. But there remains a common misconception about the process of filing for bankruptcy. See, there are so many people out there who think that if they file for bankruptcies their debts will be instantly forgiven and they’ll get a new lease on their financial life. That’s not the case. If you file for bankruptcy, you’ll need the assistance of an attorney and be subjected to an in-depth analysis of your complete financial picture. Your spending habits and credit history will be highly scrutinized, and you’ll face a long road back to solid financial footing.
There exist two different types of bankruptcy: Chapter 7 bankruptcy and Chapter 13.
- Bankruptcy 7. This particular type of bankruptcy forgives the debt you owe completely, absolving you of any repayment plans even if it does shatter your credit for the extended future. You must pass a “means test” to qualify for a Chapter 7 bankruptcy filing. Even some of the lowest of incomes can not pass this means test forcing them to file Chapter 13.
- Bankruptcy 13. When you file for Chapter 13 Bankruptcy you’re putting yourself in a position to enter into a full repayment plan. Your debt accrues no interest, but you will be faced with monthly payments for a long period of time up to 60 months (5 years). You may not get a significant reduction on your debts.
When you file your bankruptcy you’ll face an in-depth analysis of your assets. If you have enough assets to make a decent dent in your debt obligation, you’ll be asked to liquidate those assets. The money accrued from the liquidation will go goes your debt obligation.
Bankruptcy protection provides you with the time for you and your attorney to get your life in order before the trustee of the bankruptcy begins the liquidation process of your assets. Even if you don’t have any assets, a creditor can still attach your future income to your debt payments. Bankruptcy Protection makes it such that you can prevent them from doing that.
Credit card debt consolidation through bankruptcy court may not be the best solution for everyone. Possibly if you are facing home foreclosure and you have limited assets and limited income you may be eligible for a Chapter 7 liquidation but the major credit card banks want as few people as possible to qualify for Ch 7.The major credit card companies want consumer in Ch 13 so they can recoup some of their losses.
How Much Does Bankruptcy Cost?
You should not try to file for personal bankruptcy on your own. The laws are too complex and need the guidance of an expert. The cost of filing bankruptcy is quite high because of this – you have to find a reputable bankruptcy attorney to take care of the paperwork and court filings for you.
Bankruptcy costs are $2500 on average. The filing fees vary by state and depending on how complex your bankruptcy case is your costs may be higher or lower.
There are other costs to consider when it comes to using bankruptcy for credit card debt consolidation. Your FICO credit score will be ruined for up to 10 years. You will have to answer “Yes” to the question, “Have you ever filed for bankruptcy?” on job applications.
You will be forced to pay higher interest rates, if you are even able to qualify for a loan with a bankruptcy on your public record, when you apply for a car loan, credit card, or home loan.
These extra costs add up quickly and make bankruptcy a true last resort option. You should try all other debt consolidation plans first before you consider bankruptcy.
If you feel as though you may be a candidate for bankruptcy, talk to us. We’ll put you in touch with a licensed bankruptcy attorney, someone who can help you do a true analysis of your financial picture.