The challenge of credit card debt
Understanding credit card debt relief programs
Evaluating the effectiveness of debt relief programs
Eligibility criteria for debt relief programs
Real-life stories: Triumph over credit card debt
The road ahead: Managing debt long term
Unlock financial freedom with United Financial Network
Are you wrestling with credit card debt? You’re not alone. With Americans owing over $1 trillion in credit card debt, it’s safe to say it’s a growing problem in the US.
The good news is there are credit card debt relief programs that can help you get out of the credit card debt maze.
In this guide, we demystify credit card debt relief and highlight programs that actually work. Read on to start your journey towards a debt-free future.
The challenge of credit card debt
With the rising cost of living, credit card debt is becoming an increasingly common problem. It creates a financial burden for individuals who can’t keep up with monthly payments. In fact, financial stress is a leading catalyst for depression.
Cyclical spending patterns worsen the causal link between debt and depression. Credit card debt may cause some people to fall into a cycle of relying on multiple credit cards to cover expenses.
Credit card interest rates paired with the minimum monthly payments trap individuals in a treacherous current of increasing interest rates. This outcome results in the snowball effect, where interest keeps building, making it difficult to catch up.
So, does this mean you’re helpless when it comes to credit card debt? Will you be trapped in the spiral of trying to catch up on interest and borrowing more to make ends meet?
No! Credit card debt relief programs allow you to swim safely to shore without drowning in debt currents.
Understanding credit card debt relief programs
Many people dealing with debt are either unaware or confused by credit card debt relief programs. Let us ease your concerns with a breakdown of what they actually do.
A debt relief program permits a specialist to bargain with creditors for you. They present various approaches to dealing with your debt, depending on your situation. They may either negotiate for a reduced interest rate, lower the overall debt, or even eliminate it altogether.
There are a variety of debt relief programs to choose from. Each type offers different strategies to handle your debt.
There are five main options to consider when seeking debt relief assistance.
1. Debt management
Debt management is the process of planning and making use of financial tools to reduce and eventually settle your debt. There are two ways to go about it, either setting a plan yourself or going through a credit counseling company.
Developing a debt management plan on your own requires a lot of learning. You need to utilize various repayment methods and communicate with creditors solo. While this approach has some benefits, a credit counselor has experience and insights you may not have.
Pros of debt management plans
- Only one debt payment to make each month
- Finalizes a debt payoff plan
- Potential to save money which could help you clear debt faster
Cons of debt management plans
- You have to stop using credit cards
- It can take as long as two or more years to complete
2. Credit counseling
This is an affordable program available to assist people in handling their debt. Once you contact a company offering this service, you’ll be paired with a counselor. They assess your finances and help you find debt relief options.
Credit counselors will explore various strategies with you, such as debt, income, and expense management. They also investigate instant methods of debt relief.
Pros of credit counseling
- Affordable services
- Professional help with planning out your debts and finances
- Learn essential financial planning techniques, like budgeting
Cons of credit counseling
- Credit counseling fees are affordable, but not free
Some credit counseling agencies are dodgy, so research thoroughly
3. Debt consolidation
As the name suggests, this program merges most, if not all, of your debts under one banner. By creating a new loan, you’re able to make one fixed monthly repayment instead of many. This option is only available if you qualify for a lower rate compared to your other debts.
Pros of debt consolidation
- If you have a balance transfer credit card, you could get a 0% annual percentage rate (APR) for up to 21 months
- Debt consolidation loans typically have reduced fixed interest rates
- It could allow you to make one debt payment per month rather than multiple
- Helps you save money on interest so you can clear debt faster
Cons of debt consolidation
- Introductory 0% APR isn’t permanent, and high variable interest rates typically apply afterward
- Additional fees may apply, including balance transfer fees on debt consolidation loans
- You need good credit to qualify for offers with the best terms
4. Bankruptcy
This option is a legal process involving the dispute between financial responsibilities and unpaid debts. You can qualify for Chapter 7 or Chapter 13 bankruptcy after the approval of a judge and their trustees.
There’s one major distinction between the two chapters of bankruptcy. Chapter 7 offers a timeframe after which they extinguish your unsecured debt. However, Chapter 13 gives you a chance to restructure your debts while making smaller repayments.
Pros of Bankruptcy
- Overcome immense debt amounts
- Halt collection calls
- You might still be able to keep some possessions (depending on the total debt amount)
Cons of Bankruptcy
- Court systems process bankruptcy, which could be a costly affair
- Bankruptcy remains on your credit report for 10 years
- It lowers your credit score
- Certain debts, like federal student loans, don’t qualify
- Depending on your assets and debt amount, you may still be required to make payments
5. Debt settlement
This method requires the assistance of a settlement company in resolving your debt. The major advantage here is that they negotiate with creditors on your behalf.
It usually involves halting repayments and saving into a secured account. The debt counselor then leverages that vacuum of funds to arrange a settlement. If the amount saved doesn’t clear the debt after approval, the remainder is paid monthly into the arrears account.
Pros of debt settlement
- Usually settle for less than you owe
- Get professional help to clear your debts
- Pay off debts faster
Cons of debt settlement
- Creditors don’t have to settle for less
- Halting payments damages your credit score
Evaluating the effectiveness of debt relief programs
Do debt relief programs sound too good to be true? Well, they are in fact that good.
The aim of credit card debt relief programs is to help people regain financial freedom and control over their lives.
Debt relief services help you weigh out your options and evaluate your situation better. They can lower your balance and monthly payments to a more reasonable level. This result would allow you to pay off your debt faster or at manageable amounts.
Bankruptcy is the last resort for debt. It lowers your credit score and is a red flag for landlords and employers. Debt relief programs may also lower your credit score by around 100 points, but bankruptcy drops it by 200 points or more.
Credit card debt relief programs may help you get closer to balanced finances. Getting back on track is especially hard if your budget is already tight. The less you pay, the higher the interest, so you could end up trapped in a vicious cycle.
Debt relief services could help you escape the cycle, especially if you’re doing everything you can but getting nowhere.
Eligibility criteria for debt relief programs
Now you know the benefits of credit card debt relief programs, but do you qualify for them? Let’s figure it out.
Qualifying for debt relief
The criteria and conditions for qualifying depend on the debt relief program you’re checking out.
National Debt Relief has no credit score requirement, but you must have at least $7,500 in outstanding debt. They charge a fee of 18–25% of enrolled debt. There may also be additional service fees.
The fees may be too much for some. For instance, if you have $20,000 of debt to clear, they could charge around $5,000 for fees.
So, who is the right candidate for National Debt Relief? Anyone with over $7,500 in debt who has exhausted all other options aside from bankruptcy. It’s best for people with unsecured debt, which are loans that aren’t backed by collateral, like credit cards.
Bear in mind that National Debt Relief drops your credit score, so you’ll need to figure out if that’s worth it for you.
National Debt Relief isn’t for everyone. Most consumers don’t feel that a damaged credit report is worth the limited savings. That’s where alternate debt relief programs reign supreme.
Understanding your financial situation
It’s important to perform a thorough personal financial assessment before you make a decision. Understand that if you don’t settle your debt, you will rack up interest. Your credit score will fall and you’ll pay never-ending late fees.
Should you choose to settle, you’ll still have to pay fees and taxes. However, you’ll be on track to improve your credit score. You’ll also be free from unsecured debt.
Real-life stories: Triumph over credit card debt
Let’s look at some real-life examples of how credit card debt relief programs changed the quality of life for people. These UnitedFN testimonials make us feel proud of the work we do.
“This gave me so much breathing room for actually living. Credit cards and student loans can weigh you down very fast.” – Melissa A.
When Melissa came to us, her total debt was $49,365. We brought it down and gave her a total savings of $12,102. Her monthly payments of $739 allowed her to enjoy her life more without being suffocated by debt.
“I was struggling as a single mother with these high interest credit card balances. This save us.” – Joanne H.
Joanne was a single mother paying high-interest credit card balances. Her debt was $37,501. We got her a total saving of $13,754 and brought her monthly payments to $465. It made a tremendous difference in her life and allowed her to focus more on her family.
“United Financial Network’s credit card services exceeded my expectations. The rewards program is fantastic, offering great perks and cash back options. The application process was hassle-free, and the customer service was exceptional. UnitedFN truly makes credit card usage a positive and rewarding experience.” – Anonymous.
This valued customer pointed out that our rewards program made credit card usage a positive experience. Many people have negative associations with credit use or covering credit card debt. We make it a positive experience and help you build a healthy relationship with credit.
The road ahead: Managing debt long term
What can you do to build a sustainable financial plan and prevent falling into future debt? Here are some tips to ensure you have an efficient financial situation.
- Establish clear financial goals.
- Keep track of your income and expenses to gain awareness of your spending habits.
- Save towards an emergency fund.
- Don’t accumulate unnecessary new debt.
- Try to live below your means.
- Save towards your future with a 401(k) or specific goals.
- Invest in insurance coverage for health and property to prevent additional debt.
- Set consistent dates to review and adjust your financial plans and goals.
- Work towards building good credit by paying bills on time.
- Don’t hesitate to consult credit counselors or financial advisors when you need guidance.
Unlock financial freedom with United Financial Network
Credit card debt is a problem that many Americans face. It can have serious mental and financial implications, but you don’t have to suffer in silence.
You also don’t need to declare bankruptcy or turn to National Debt Relief when there are credit card debt relief programs. In our practice, we’ve seen how these programs have helped our clients focus on actually living instead of being consumed by debt.
We genuinely care about getting you on the track toward better financial control because we understand the difference our quality services make.
If your debt is pushing you into a corner, don’t hesitate to contact us. We’ll help you free yourself from the financial burdens with our personalized debt relief programs.
