Americans are notorious for carrying high credit card debt. According to Time magazine, only 35% of credit card users don’t carry a balance. How do people deal with credit card debt? Many people think the only way to handle problems with high credit card debt is bankruptcy. Filing for bankruptcy is a proceeding that can have severe consequences for your financial future.
For some, a Chapter 7 Bankruptcy (your debts are completely eliminated) is the best debt relief option for credit card debt. In other cases, a Chapter 13 Bankruptcy is a better option. Chapter 13 allows you to eliminate your debts for a smaller percentage than you owe and even allows you to strip a lien from your property if the fair market value is less than what is owed. Many consumers can’t qualify for a Chapter 7 Bankruptcy. And a Chapter 13 Bankruptcy often results in you paying up to 80% back to your unsecured creditors.
So what are your options for credit card debt relief besides bankruptcy?
Options For Credit Card Debt Relief Besides Bankruptcy
Consolidate Debt: If you have several debts carrying high interest rates, you might consider debt consolidation. This arrangement involves taking out a new loan, the funds from which go toward paying down the other accounts. The end result is that you’re paying just one bill instead of several and you might be able to negotiate a lower interest rate and reduce monthly payments. However, consolidating doesn’t reduce the total amount you owe.
Ask about Hardship Programs: Some lenders are willing to negotiate a new payment plan if you qualify for a hardship program. If you have a long-term illness, a disability preventing you from working or a military deployment, some companies may be willing to work with you to lower payments or allow you to suspend them. You’ll need proof to support your claim for a hardship in order for a company to approve the arrangement.
Attempt to Negotiate and Settle Debts (Debt Settlement):
What is a debt settlement? A debt settlement is when a consumer negotiates with their creditor (the credit card company) to reduce the overall amount of debt that you owe. Once your overall debt amount is reduced, then you pay it off in a lump sum or over a short-term payment plan. Credit card debt settlement is a good choice if you have more debt than you can pay off in a 2-3 year period or if you have experienced a significant financial hardship that has caused you to fall behind on your monthly payments.
Why would a credit card company agree to a debt settlement? It’s no big secret that banks are in the business of making money. Especially when they get a consumer stuck in the cycle of paying the minimum monthly payment, resulting in a small principal pay down. But, once you stop paying the minimum, they lose their income and debt settlement allows them a way out, since the banks can now claim your account as a loss. They then use the losses to offset other profits and reap the benefit of creative bookkeeping.
Debt settlement contains no “secret sauce” formula. If you owe a small amount to one or two creditors you could talk to them to settle your accounts yourself. However, if you owe significantly more money, you should consult an experienced debt settlement attorney. It’s often difficult to determine what defines a good settlement. Should you disclose your financials? Is the offer you receive the best you’re going to get? What makes this a valid offer? Does it need to be in writing? Is the written offer valid and binding on all parties? Hiring an experienced and knowledgeable credit card debt relief attorney will relieve you of the stress of dealing with this situation on your own. Imagine the relief you will feel knowing that an experienced debt relief attorney will handle all of the negotiations, finalize all of the settlements and create a plan to fund these settlements.
Credit Card Debt Help In San Diego
Filing for bankruptcy to eliminate your high credit card debt is a big step. If you aren’t sure this is the right option for you, then contact me for a complimentary consultation. I will be happy to meet with you for free and help go over the best option for you to resolve your credit card debt problems.
Call Gamez Law Firm for a FREE consultation to discuss your credit card debt relief options. Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in La Jolla, CA. For more information, please contact Daniel Gamez at 858-217-5051, firstname.lastname@example.org or use our online contact form. Stay updated with the latest debt relief tips by following on Facebook and Twitter!