American Debt Solutions - Credit Card Debt Settlement
Types of Debt Solutions
Debts generally occur when your earning power reduces in comparison to your expenditures or overheads. Debt solution companies offer debt management solutions which enable you to pay off your outstanding dues in a timely manner. However the process involves negotiations on your behalf with your creditors. The companies offering consumer debt solution often provide debt consolidation solution services in addition to credit card debt solutions.
A few options are available to the debtors to redeem the debt and maintain a positive state of financial affairs. Debt Solution companies offer services which might prove to work in your favor. Here a few of your options:
Debt Consolidation
This process includes adding up or combining all your current loans into a single loan package having unique payment terms and interest rates. All your existing loans are re-financed into a single entity and the monthly installment amount adjusted to suit your cash inflow and paying capacity. The process offered by the debt management companies is termed as debt consolidation solution.
Debt Elimination
As per this solution the debt solution company negotiates on your behalf with your creditors to reduce or cut down some portion of your borrowed amount and its interest net payable. The process is therefore called debt elimination as it helps to "eliminate" or delete some of your total payable amount. Experts refer to as debt elimination.
Debt Settlement
In this option, the company helps you to negotiate with your creditors so as to reduce your outstanding debt by as much as 40-60%. This includes paying a fixed amount of monthly installment to your settlement company. All your installments are accumulated into a special account till they attain a certain magnitude. The company then pays your creditors from that account as per negotiated terms and conditions. This is also known as consumer debt solution.
Debt Management
This activity involves a credit counseling session where a credit counselor or a financial debt expert analyzes your current finances and debts. The counselor then works out a budget for you which would enable you to put in more cash towards debt payment. If you are into severe debt, the counselor may suggest a DMP program in which he can negotiate with your creditors and request them to lower the interest rates and cut down upon late fees. Services offered are classified as Debt Management Solutions.
Self repayment plan
This is a "do-it-yourself" type of plan in which you pay off debts on your own. No professional help is solicited or taken. The self repayment plan can be successful if you follow a tight budget plan on a monthly basis and are confident about churning out the required amount regularly.
Bankruptcy
Filing for bankruptcy under chapters 7 and 13 as per the "Bankruptcy Act" can be one of your debt solutions. However it is not recommended that you do so and should be considered as a last resort. Filing for bankruptcy can severely hurts your credit ratings in the future and lower down your score significantly which might prevent you from availing much needed loans in the future. Bankruptcy records stay on your account profile for a long time and create a negative impression of your account status.
Ostrich method
This involves "doing nothing" about your debts and ignore paying your monthly installments. In short you don’t take any steps to correct your financial status and let things be the way they are. Doing so gives an indication that you plan to disappear and this prompts your creditors to take special steps in debt recover and even resort to legal activity.
Availing credit card debt consolidation is meaningful since it saves time and proves a definite solution to your debt issues.
