According to the data compiled by CreditCard.com in January 2010, the total US consumer debt amounts to $864.4 billion, 98% of which is credit card debt. Debt on credit card can result in negative ratings in the credit report. This can prevent an individual from qualifying for loans and advances. Therefore, ridding oneself of these debts is crucial. Credit card debt relief helps to reduce the total sum owed by 40-60%. Within a period of 1-3 years, one can restore one's credit and be back on track.
Credit Card Debt Relief Company: Steps to Reduce Debt
One can opt to approach a credit card debt relief company to manage one's debts. Taking the aid of a settlement company is also the best way of avoiding compulsion calls from creditors. Everything will be tackled by the mediator and this serves to reduce a great amount of stress and emotional burden during such crisis periods.
A debt settlement company will ideally suggest a debt consolidation strategy first. This would consolidate the numerous small debts to one large chunk, which would, in turn, lower the interest amount drastically. In addition to increasing a debtor's much-needed savings, debt consolidation also makes the payment plan flexible so that the debtor has the option of extending the payment period from five to thirty years. This proves to be a great financial relief to a debtor.
After debt consolidation, the monthly payments become very easy. The settlement company also aids in planning out a realistic monthly budget to ensure that one stays on track financially. The aim of budgeting would be to clear off all the unsecured debts, save money over and above the monthly payments and avoid incurring more debts.
A reputed settlement company checks an individual's credit score to determine the outstanding debt amount on the credit cards. It adds an interest percentage taking three years into account and then determines the monthly payment. While this process is on, credit card usage has to be stopped. The settlement company pays off the credit card balance and the debtor's one month payment gets credited to the company for settlement negotiation. Some companies tend to charge a monthly fee for their service.
