Legally Eliminating Credit Card Debt Takes Work

If you want to legally eliminate credit card debt, it is going to take some work on your part. Credit card debt is a burden that rests on the shoulders of many Americans. Therefore, learning ways to eliminate the debt can be very beneficial to many. Here are a few tips for eliminating your credit card debt. 

Debt Management Plan

A debt management plan is one option for legally eliminating credit card debt. With this option, you will be paying the entire balance of the debt back; however, the terms of the original contract will be slightly altered. In order to start a debt management plan, you can organize it yourself or hire the assistance of a credit counseling company. You need to assess your total debt situation and determine how much you can afford to pay to each creditor every month. 

Then you or the credit counseling company will have to call your creditors and negotiate with them. Let them know that you are willing to pay back all of your debts to them, but you will need some help. Most of the time, the credit card company will be willing to drastically lower your interest rate if you allow them to close the account and agree to a monthly payment. You can negotiate the payment and get it within your monthly budget. When you agree to a payment plan with all of your creditors, you need to send in your monthly payment to them. Stay on this monthly payment system, and the debt will be eliminated much faster because of the lower interest rate.

Settlement

When you have accumulated a large credit card balance and have allowed it to become delinquent, settlement may be one option that you have. With a credit card settlement, you will also negotiate with the credit card company. However, this time, you are trying to eliminate your debt in one action. You will agree to give the credit card company a sum of money in return for their closing out the account. Many times, a credit card company will agree to settle for less than half of what is actually owed if the account is delinquent. You pay them one lump sum, and they cancel the rest of the debt. With this option, you will want to be aware that it can damage your credit and that you will have a tax liability for the debt that was canceled.

Bankruptcy

Another legal way to get rid of credit card debt is to successfully be awarded bankruptcy protection. Bankruptcy is something that you will want to seek legal counsel for before you try it on your own. The bankruptcy process can be very complicated and confusing for those with no experience. You have to fill out all of the appropriate paperwork and meet deadlines in order to have your case heard. If you are awarded bankruptcy by the court, you could be able to eliminate all of your credit card debt at once. 


Improve Your Credit Score - Free Consultation