subject: Credit Card Debt - Three Legal Ways For The Elimination Of Unsecured Debt [print this page] Credit Card Debt - Three Legal Ways For The Elimination Of Unsecured Debt
The concept of taking or borrowing unsecured loans has increased a lot with in the last few years. This is basically a loan that is issued without keeping any security or mortgage deposit. The main drawback of unsecured loan is that it is issued at high rate of interest. The banks and financial institutions charge high rate of interest because of their financial security purpose. Credit card is also a type of unsecured loan. Apart from charging high interest rate the lenders take some penalties and other hidden charges as well. Due to these things the amount of credit card debt gets doubled quickly and easily. In order to get rid of the burden of credit card debts, the state government introduced three legal ways. These ways are considered as the reliable ways for the elimination of debt.
Bankruptcy:
this method brings fast reduction in the amount of debt but the long run consequences of bankruptcy are not good. It brings extremely bad impact on credit ranking due to which a person gets ineligible for taking financial aid from banks for the upcoming seven to ten years. The process is lengthy as well as expensive.
Debt Consolidation:
in this process a person will get the chance of merging all loans in to one single loan. Now he will have to pay to only one lender rather than paying to many lenders. This process is good as now he is out from the stress and tension of paying to many lenders. Within the maximum time period of 4 years usually, people get rid from credit card debt via debt consolidation easily.
Debt Settlement:
in this process a person will take the help of professional negotiators that negotiate with lenders and convince them to agree for granting reduction in the balance that debtor has to pay. Chances for getting up to 50% reduction are present in case of debt settlement. Person will get rid of unsecured debts with debt settlement in the minimum time of 2 to 3 years.
All these methods are good in their own places, if the amount of debt is less than ten thousand dollars, debt consolidation will be the wise choice but if amount is exceeding $10K than debt settlement is the right choice. It is advisable that a person should stay away from bankruptcy as much as he can.
If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals.
