Consolidate Credit Card Debt - What is the Best Way to Reduce Debts?
Credit card balances easily spiral out of control when confronting long-term financial problems.
In the best circumstances, the use of credit should be reserved for purchasing assets that retain value or developing business income.
In both cases, value obtained justifies a reliance on credit.
Frequently however, a cash emergency may arise that forces cardholders to rely on credit cards to pay regular monthly living expenses.
This type of credit card use accumulates maximum balances rapidly that may become too large to repay.
Fortunately, several different methods of consolidating debts provide effective ways to reduce payments immediately and eliminate account balances altogether.
The trick is finding the best way to reduce debts.
Debt management plans allow participants to combine accounts and make one monthly payment.
Plans are administered by services that are frequently associated with non-profit credit counseling services.
Under a management plan, payments on credit cards decrease according to agreements negotiated with banks.
A typical agreement cuts interest rates and may eliminate a substantial portion of past penalties for late payments.
In exchange, participants waive future charge privileges until repaying all principal owed.
Debt settlement plans provide a more aggressive way to cut those payments.
Under these plans, settlement agreements usually require banks to waive a substantial portion of the principal owed on card accounts.
Because less than full principal is repaid, settlement plans create significantly larger savings and have a correspondingly more adverse affect on credit scores.
Debt consolidation loans may reduce both payments and total loan cost.
The easiest way to reduce payments is to apply for a home equity loan.
Once approved, proceeds from a home equity loan may be used to repay credit cards.
Using home equity in this way also contains a hidden cost.
Extending repayment of debt over 30 years may increase the total amount of interest paid dramatically.
Chapter 13 bankruptcy combines all debts into a plan for repayment under the administration of a U.
S.
Trustee.
In many cases, repayment of credit card accounts under a Chapter 13 plan requires repayment of only a few pennies on the dollar.
All debtors who consider filing Chapter 13 should also be aware that filing has a highly destructive impact on future financial opportunities.
For example, filing bankruptcy under any chapter dramatically affects future credit availability, job opportunities, and rates quoted for insurance premiums.
In conclusion, the best way to reduce debts is the method that produces acceptable savings and preserves financial opportunities.
For most people, either a management plan or settlement plan satisfy both requirements.
In the best circumstances, the use of credit should be reserved for purchasing assets that retain value or developing business income.
In both cases, value obtained justifies a reliance on credit.
Frequently however, a cash emergency may arise that forces cardholders to rely on credit cards to pay regular monthly living expenses.
This type of credit card use accumulates maximum balances rapidly that may become too large to repay.
Fortunately, several different methods of consolidating debts provide effective ways to reduce payments immediately and eliminate account balances altogether.
The trick is finding the best way to reduce debts.
Debt management plans allow participants to combine accounts and make one monthly payment.
Plans are administered by services that are frequently associated with non-profit credit counseling services.
Under a management plan, payments on credit cards decrease according to agreements negotiated with banks.
A typical agreement cuts interest rates and may eliminate a substantial portion of past penalties for late payments.
In exchange, participants waive future charge privileges until repaying all principal owed.
Debt settlement plans provide a more aggressive way to cut those payments.
Under these plans, settlement agreements usually require banks to waive a substantial portion of the principal owed on card accounts.
Because less than full principal is repaid, settlement plans create significantly larger savings and have a correspondingly more adverse affect on credit scores.
Debt consolidation loans may reduce both payments and total loan cost.
The easiest way to reduce payments is to apply for a home equity loan.
Once approved, proceeds from a home equity loan may be used to repay credit cards.
Using home equity in this way also contains a hidden cost.
Extending repayment of debt over 30 years may increase the total amount of interest paid dramatically.
Chapter 13 bankruptcy combines all debts into a plan for repayment under the administration of a U.
S.
Trustee.
In many cases, repayment of credit card accounts under a Chapter 13 plan requires repayment of only a few pennies on the dollar.
All debtors who consider filing Chapter 13 should also be aware that filing has a highly destructive impact on future financial opportunities.
For example, filing bankruptcy under any chapter dramatically affects future credit availability, job opportunities, and rates quoted for insurance premiums.
In conclusion, the best way to reduce debts is the method that produces acceptable savings and preserves financial opportunities.
For most people, either a management plan or settlement plan satisfy both requirements.