Did you know that financial debt here in America, especially credit card debt, is at the highest levels ever? One source reports that each American family now owes $19,000 on the average, the majority of which is probably credit card debt. Another statistic said that the average US household has a credit card debt of $15,956.
This same source mentioned that as of year-end 2008, the average American cardholder had three and a half credit cards with an average annual percentage rate of 12.78%. No wonder so many Americans are wondering how to pay off credit card debt.
Debt management programs
One answer to this question is called debt management programs or DMPs. This is a program offered by a credit counseling agency or online debt management company. In this type of program, the agency or company offers management counseling and negotiates with collection agencies or creditors to help get lower interest rates on your bills. If the agency or company can negotiate lower interest rates, this will reduce your monthly payments so that you have a better chance of paying your bills on time.
Debt management is sometimes combined with debt consolidation. This is where all your debts are combined into a single monthly payment at a lower interest rate. For example, suppose you owed $15,000 on a credit card at 15%, $13,000 on a personal loan at 20% and $12,000 on medical bills at 25%. You would have total debt of $40,000. Lump all of it together at 15% and you would have the same amount of debt but at 5% less or a savings of about $2,000 a month.
Bankruptcy as a way to pay off credit card debt
Another option and yet the most avoided to pay off credit card debt is to declare bankruptcy. This is considered a last resort as it can have serious consequences on your ability to get credit for as long as 10 years. The US is seeing more and more people filing for bankruptcy, possibly because of unemployment coupled with the mortgage crisis. In fact, approximately 9,000 people a day now file for bankruptcy. Check out these bankruptcy statistics
However, bankruptcy is not an end all and be all. For example, there are two ways to file it: Chapter 7 and Chapter 13 bankruptcies.
A Chapter 7 bankruptcy is the one most people choose and can be used to discharge credit card debts. It is used by people who have little in the way of assets with which to pay creditors. Yes, you can discharge your unsecured debts in a few short months but the consequences can stick with you for years.
In comparison, a Chapter 13 is more of a way to reorganize your debts. You make full or part payments based on your repayment plan, When you complete your plan, all debts are then discharged.
In Colorado, a Chapter 7 bankruptcy allows you to keep your household goods up to a value of $3,000, motor vehicles up to a value of $6,000, work related tools, disability benefits up to $3,000 a month and equity in your home up to $60,000 (unless either you or your spouse is disabled in which case you get to keep $90,000 in equity). Any assets beyond these can be sold to satisfy your creditors.
As you can see, filing for bankruptcy may be a way to get rid of your credit card debts but it can be painful and haunt you for years. Don’t forget about the cost of filing bankruptcy too – it can easily run $500 to $2000 with the help of a bankruptcy attorney.
Debt Settlement Programs
Probably the best option that you can go for is through debt settlement debt relief. In this type of program, a third party company negotiates with your creditors to lower your debt and to create a more affordable payment plan. The credit card companies don’t want you to know this but a good debt relief company could probably get your debts reduced to a fraction of what you owe in as little as 2 to 4 years.
You can use debt settlement to pay off your credit card debt once and for and be done with it. Take 30 seconds to fill out form and get a free debt analysis. Plus, there are no charges upfront so you pay nothing unless it can get your debt reduced and a good repayment plan.
If you wish to know more about your options, get in touch with the many financial experts of NationalDebtRelief.com. Call, chat or fill out the form found on this page. The time to act on paying off your debts is now.