subject: Filing Bankruptcy For Credit Card Debt - Know Your Options Before Filing Bankruptcy [print this page] Filing Bankruptcy For Credit Card Debt - Know Your Options Before Filing Bankruptcy
For ages bankruptcy had been a standard solution for people who were unable to keep up with their debt payments. However, this has changed in the recent past. Most of the debtors have realised that even though bankruptcy gives them temporary relief from their debts, it is however a bad financial decision as it spoils a person's credit report. A low credit score ruin a person financially in today's day. Your credit score is check in every walk of the life. You will need a good credit score to get a loan for your new car; even for a new employment a person's credit report is checked.
The new bankruptcy laws have made it difficult for people to qualify for bankruptcy under chapter 7. Hence it is important for the consumer to explore other options. There are many debt relief options available to suit different levels of financial problems. Some of the options which have been very effective in giving debt relief are credit counselling, debt consolidation and debt settlement.
Credit counselling as the name suggests is only counselling which helps the customer understand the main cause o his debt. The educate people about good spending habits and also help them come up with a payment plan which will bring them out of debt. This method does not have any negative impact on the credit rating.
Debt consolidation is another method which aims at giving relief to customers who have got into trouble due to multiple cards. The credit card interest rates are high hence it makes more sense to consolidate all these loans into one and take out another loan with a lower rate of interest to pay them off.
Debt settlement is a method where the debtor can get a reduction in the total amount that he needs to pay to the creditors.
Debt settlement is a legitimate alternative to filing bankruptcy. If consumers are experiencing a financial hardship and have at least $10k in unsecured debt then debt settlement can be a legitimate way to eliminate up to 70% of that balance.
