It generally does not always take a string of nasty calls from debt collectors for individuals to appreciate they need for the right credit card debt assistance. Often, people realize they are in trouble (or about to find yourself in trouble) when other events take shape, including the lack of income, temporary or permanent layoff, etc. Other symptoms may arrive when people cannot maintain their existing life style or whenever a paid off life style cannot be maintained.
When taking a look at different alternatives with regards to personal credit card debt assistance, debtors will invariably investigate the worst-case scenario, which would be bankruptcy. If they can stick a structured debt repayment program, they might encounter and consider their debt negotiation options and, last but not least, they might even realize that they’ll manage the debt themselves via a debt management program.
We shall take a glance at these three options in terms of credit card debt assistance: Chapter 7 bankruptcy, debt negotiation options, and the debt management program.
Chapter 7 Bankruptcy
As you are able to the worst option, Chapter 7 bankruptcy provides the most depth when it comes to credit debt assistance. Why? Because Chapter 7 Bankruptcy essentially wipes the debt clear off your slate. Which means in case a debtor owes $30, 000 in credit card debt, they will have to repay nothing. Not a single penny. This becomes the largest advantage to Chapter 7 Bankruptcy as far as credit debt assistance can be involved as it allows the debtor to start fresh.
That fresh start, however, won’t happen for a number of years. To be precise, it could be anywhere from 6 to ten years depending on when the Chapter 7 bankruptcy is discharged. During this time, debtors are affected from a woeful credit score and will encounter difficulties in terms of obtaining new credit, including secured credit. This makes investing in a home, replacing a vehicle (if financing will become necessary), as well as minor purchases that require financing (such as an engagement ring or appliances) extremely difficult to obtain.
Once debtors who need personal credit card debt assistance realize how financially debilitating Chapter 7 bankruptcy can be, they often times stay away and look at the next option — debt consolidation.
Unlike Chapter 7 bankruptcy, debt consolidation allows a debtor to lessen his credit card debt levels by around 65%. Debt settlement could make debt repayment more affordable for an individual, but it also is sold with injury to a credit history.
Debtors who choose this program can handle their creditors by themselves or can hire a company to make the arrangements for the kids. This comes at a high price, that will be either paid up front or within the monthly settlement payments.
The downfall to debt consolidation is that it damages the credit score and regular payments are expected of the debtor. If the debtor misses a fee for any reason, the creditor usually takes action despite most of the work and effort that the debtor has already invested. Yet another downfall is that not all of the debt is eradicated, but since only a fraction must be repaid, debt negotiation is often the choice of preference for debtors seeking personal credit card debt assistance.
Debt Management Program
For the astute debtor, a debt management program could be the only viable option. Since a debt management program is normally a self-made debt repayment plan, it allows the debtor to settle credit debt without exceptional damaging effects on the credit bureau and with no the deal with difficult credits. A fruitful debt management program will contain reveal budget to determine simply how much more money may be allocated toward debt, a repayment plan that incorporates monthly, accrued interest and a schedule which allows the debtor to monitor progress and stay focused.
The greatest downfall with a debt management program is that it becomes the debtor’s responsibility to make certain they could maintain their payments and stay focused. In this regard, a debt management program does is not provide personal credit card debt assistance per se, but rather allows the debtor to take straight back control and steer their debt in the right direction.
In many cases, if debtors are able to negotiate a structured debt consolidation with creditors and repay a lower debt, they are able to avoid all of the disadvantages that come with the settlement by opting as an alternative to create a debt management program. While there are no written off balances with a debt management program, the debtor does enjoy greater long-term benefits should they manage their debt themselves.
Regardless of which options works best for a debtor, they ought to be sure that they understand all credit card debt assistance options before they choose any single one of these. The consequences of choosing the incorrect option can often be worse than any collection call or short-term sacrifice.