Credit Card Debt Relief Debt Consolidation: Choices Abound

Feb. 11, 2013 - PRLog -- People who need help getting out from under credit card debt have a number of choices, each with some advantages and pitfalls. Here's a broad overview:

Nonprofit credit counseling

What: Long-term debt repayment plans.
How it works: A counselor evaluates your finances, helps devise a budget, pays bills out of a monthly payment you make; may arrange breaks from creditors and bring delinquent accounts current.

Get Started With Credit Card Debt Relief:

http://www.nationaldebtreliefprogram.org/

Pros: Budget help, financial education; reduction in interest rates and late fees; maximum fee of $50 a month, which may be reduced based on need.

Debt settlement

What: Negotiated settlement of existing debts.
How it works: You pay a monthly amount into escrow instead of paying creditors. Company negotiates lump-sum settlements with creditors for a portion of balance due. Settlement company cannot legally take fees until the settlement is accomplished, but an exception exists for law firms. Fees are said to vary widely, up to 40 percent of the erased debt.

Pros: May reduce outstanding balances, if successful. No fee until debt reduction accomplished.

Get Started With Credit Card Debt Consolidation:

http://www.nationaldebtreliefprogram.org/consolidating_cr...

Bankruptcy - Chapter 13

What: Court-supervised repayment and partial discharge of debts for people receiving steady income, and whose unsecured debts are less than about $360,000 and secured debts are under $1.08 million (adjusted annually).
How it works: After completing pre-bankruptcy counseling, you or your lawyer files a petition with the bankruptcy court. If approved, you enter a repayment plan lasting three to five years. A trustee takes your monthly payments and distributes money to creditors.

Pros: Unsecured debts are partly erased; collection actions and lawsuits are frozen; you may save your home from foreclosure and stretch out some debts secured by property.

Cons: Legal and court fees, extensive documentation required; relatively low success rate; credit reports will show bankruptcy for 10 years.

National Debt Relief Program offers a free debt analysis which can be taken advantage of at their website:

http://nationaldebtreliefprogram.org/