Credit Card Debt Relief becomes an option when you can’t pay your card bills. This can help you manage your debts because it involves renegotiating your monthly payments with your card issuer. Although it is a great tool that helps you to avoid bankruptcy, it may not be good for everyone. This article will discuss all you need to know about this topic.
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Credit Card Debt Relief
Credit Card Debt Relief helps debtors to pay back outstanding credit card debts in different ways. It can be through granting a new loan with a lower interest rate, extending the term of the loan, or reducing the balance owed by the debtor. Although debt relief does not mean your debts are forgiven, it lowers the amount you have to pay off.
What is Debt Relief?
The term “Debt Relief” is also known as Debt Consolidation. It is a method used by borrowers to reduce the amount they owe and become debt-free in the long run. It assures the financial recovery of the debtor after the debt consolidation. However, after debt relief, it is advisable to keep one’s spending habits in check to avoid running into another debt.
Government Programs for Credit Card Debt Relief
There are various programs organized by the government to assist people in credit card debt. However, these debt relief programs are limited. They vary from mortgage to student loans to medical and hardship relief. But as of 4th September 2022, the government is not offering any debt relief for credit card debt owed by civilians.
If you are a member of the armed forces, the Servicemembers Civil Relief Act (SCRA) sets a reduced interest rate for credit card debtors on active duty in military service. All you have to do is write to the company you owe, attaching a letter from your commanding officer, showing when you started service.
Trump Credit Card Debt Relief
There are no credit card debt relief programs under the Trump Administration. The Telemarketing Sales Rule is the only relief program under the Trump administration. Its function is to safeguard consumers from scam debt relief and consolidation programs. It does not offer any form of debt relief.
How to Negotiate Credit Card Debt Settlement Yourself
Credit Card Debt Settlement lets you pay off less amount than your credit card debts. You can negotiate your debt settlement on your own, although it is usually done with the help of a debt settlement company.
However, if you involve a third-party agency, you will be charged extra fees for the service. there are three different methods you can use to settle your credit card debt between yourself and your card issuer:
- Lump-sum settlement: You and your card issuer can settle for an amount that is less than the one you owe.
- Workout agreement: your card issuer can lower your interest rate. However, your account may be closed.
- Hardship agreement: If you are going through a period of crisis (i.e., you suddenly lose your job), you can settle for a hardship plan. Your card issuer may lower your interest rate, cancel the debt or reduce your payment plan temporarily. It depends on what you both agree on.
Unfortunately, these settlement plans may affect your credit history and scores negatively. They may however offer temporary freedom from debt.
Credit Associates Credit Card Debt Relief Program
Credit Associates is an accredited member of the industry group, American Fair Credit Council (AFCC). It has been running a debt relief program in 42 states since 2007. They negotiate credit card debts, medical/hospital debts, and business debts.
It does not offer assistance for a mortgage, auto loans, or student loans. Also, it requires that you make monthly payments so it can negotiate your debts. However, to see if you are suitable enough for their program, they offer a free consultation service to review your financial situation.
To qualify for their program, there must be proof that you are in financial hardship. You must be in a debt of at least $10,000. You must also be at least several months behind in your payment but be able to make monthly payments to the program for 2-3 years.
Register in the Credit Associates online portal at https://www.creditassociates.com/ to get started. You can also monitor your account through the same portal.
Frequently Asked Questions
Below are some frequently asked questions:
How Can I Settle My Credit Card Debt?
Start by visiting your card issuer or debt settlement agency. Using a letter, discuss your inability to pay your debt and your willingness to negotiate other settlement options. Offer a lesser amount than you owe or tell your card issuer that you are filing for bankruptcy.
Is there such a thing as credit card debt relief?
Credit card debt relief offers a credit card debtor different settlement options. You can get your debt reduced, your interest rate reduced or your debt canceled. You only have to negotiate with your card issuer or debt settlement agency.
Why is debt relief bad?
While you are negotiating with your card issuer on settlement options, you will be asked to stop paying your bills for some time. This will affect your credit score and history for about seven years.
How long does it take to improve credit score after debt settlement?
Debt settlement affects your credit score negatively. However, you can begin improving your credit score. after about 6 to 24 months, your credit score will improve depending on how poor it is after the debt settlement.
Is it better to settle a debt or pay it in full?
If you are owing a debt, it is better to pay in full if you are capable of doing so. Settling a debt hurts your credit history unlike paying off a debt, which has no side effects.
Can the government pay off my debt?
There are no government debt relief programs for credit card debt payments. There are no government programs that can even reduce the amount you owe or your interest rate.