Paid to Play

Thankfully for large numbers of people in the US who have gotten themselves strapped with credit card debt there is hope.  The majority of folks don’t realize all of the debt relief programs they have available to them, but there are quite a lot.  Comprehending the differences between these methods will be important to making sure you choose the right plan for your financial woes. 

One of the first things a lot of people think of is to get a debt consolidation loan.  This appears like a simple fix but might in the long term stir more bad than good, if that is you even qualify for the loan to begin with.  The reason I say it will be hard to obtain a debt consolidation loan is usually one must put up some kind of collateral first, in many cases this will be a piece of real estate.  Those people that have no collateral must then have incredible credit to get an unsecured loan, and folks who are trapped in credit card debt often times don’t have good credit.

 If someone does finagle to get a secure loan against your home this can be a bad plan, for the simple fact that you are transferring low risk credit card debt into high risk secured debt against your home.  So if you wind up right back in the exact unfortunate spot and cannot to make payments on the loan you chance the probability of getting your house taken by the bank.

Then there is credit counseling, this method shares many similarities to a debt consolidation loan but without getting the loan.  The benefits of this plan are reduced APR’s and one consolidated monthly payment.  The problem to this program is it does show negatively to your FICO score and if you go delinquent two payments you will get kicked off the program; then losing the advantages of a lower APR.  In most cases debtors fail out of this program because the monthly payments in many cases are not much smaller than the monthly minimums, with some companies they are even more expensive.  So folks who can hardly manage to make payments at this point may not last the duration of the program.

Debt Settlement is another plan that has seemed to give the best results for struggling debtors throughout this miserable economic collapse.  By enrolling into a debt settlement program the debtor will wind up keeping just about 50% of how much they owe on their bills.  So understandably this will drastically peel back on the monthly outlay towards credit card bills, and they will also get out of debt much more rapidly.  The sole real drawback to this program is falling past due on the bills which must be done to ensure completion of the debt settlement, so the credit history will go down.

The end result is no matter what option is chosen those who are stuck dealing in debt need to discover a way out as fast as they can.  Credit card debt is horrible for peoples overall financial good standing.  Imagine all the income being put out to credit cards being actively invested?  What gain could that be to your life?  If you remain in credit card debt you might never find out.