Eliminating Credit Card Debt: What Are The Options?

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Overview
Credit card debt levels in America are now approaching $952 billion with more
and more Americans looking for a way out of the debt cycle. In our parent and
grandparent's day credit was the exception, it has become the rule. The speed of
life, the technology and consumer consumption have demanded more options for
financing.

High levels of credit card debt, in fact the process of applying for high numbers of
credit cards, can plummet a consumer's credit score quickly. This lower of the
credit score can result in more difficulty getting a mortgage, higher interest rates
and higher down payment requirements as well as reduction in the ability to get
high ticket items on credit (such as cars, furniture, boats and recreational vehicles).
In some cases employers will pull credit histories as a prerequisite to the hiring
process.

Credit Counseling
Non-profit and often free services for credit reorganization can offer options for
the debt heavy consumer. The credit counselor will take over the negotiation
process with creditors. In many cases, the credit counselor has access to special
discounted rates, special relationships and unique offers with creditors.

The consumer may be asked to terminate or destroy all credit cards, all debit cards
and move to structured payment schedule designed by the counseling firm. There
are often pre-existing conditions, standard terms and clear contracts for the
consumer. Classes, workshops and financial planning tools may be part of the
process as well.

Debt Settlement
In this case the consumer works with a professional negotiator to settle, reduce or
forgive debts with creditors. Often, the arrangement requires immediate
settlement of the negotiated balance. If the consumer does not have this amount
available, payments are made to the debt settlement company.

Fees for debt settlement will come out prior to payment to creditors. The
collection process continues during this time. Creditors may become more hostile
as the payments are not being made.

Debt settlement, as payments are often reduced will have a negative impact on
credit ratings.

Bankruptcy
Considered the last line of relief for consumers, American bankruptcy laws have
changed in recent years. Chapter 7 bankruptcy, where the consumer's slate is
cleared is now more difficult to qualify for; Chapter 13 requires the court to
prioritize payment requires full restitution of the debt, but usually does not
include interest rates.

Conclusions
Each solution creates impact on the credit score, the consumer and the future
credit options. Careful research, thoughtful decisions and clear commitment to
the solution are essential for the consumer to recover from the decision.

About the Author:
New Debt Rules is a group of Fathers tired of working countless hours only to find themselves deeper in debt. We are dedicated to uncover the best ways to become debt free in all areas of their lives including Credit cards, Medical bills, Taxes, Student loans and mortgages. The rules of the game have changed and we need to learn the "New Debt Rules." Grab your Free Copy of " Secrets of A Debt Insider CD" now to save thousands off of your credit cards at http://www.NewDebtRulesBlog.com



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