Everyone’s debt situation is unique and determining what will work best for you begins with categorizing your debt. If you want to eliminate credit card debt, you should determine whether your debt is unsecured or secured, because it significantly effects your options.
A loan which is secured by property is a secured debt. Simply put, if the bank can come and take something from you if you don’t pay (ie; home, car) then the debt is secured.
Of the many kinds of debt, unsecured is most frequently found and usually in the shape of credit cards.
Eliminating Unsecured Debt
The three most common ways to eliminate unsecured debt are
1.paying as agreed
2.insolvency
Three.There are methods of resolution like debt settlement and negotiation. These involve paying a percentage of the amount actually owed. So you can see that bankruptcy is not a necessary solution. The Bush administration changed the Bankruptcy Law in the year 2004, due to which it is estimated that less than 10% of people filing bankruptcy are able to discharge any debt successfully. Chapter 13 requires that the majority of people pay it back.
Credit Counseling and Debt Consolidation services typically focus on eliminating your debt by settling with your creditor for less than the balance due. These services are basically owned by large banks and credit companies and they always charge a fee. The good news is, this is something you can do on your own.
Settle For a Lower Price than What is Currently Owed
Leverage is the secret to a triumphant settlement. A bank will not complete a settlement if they think they can get more money from you. Not having to make payments for months may be the way you will have to go. Your credit score will be affected and that will also be reflected on your credit report, so what you have to do is to make a good debt settlement.
During the time you are not making payments to the credit card company they will constantly attempt to contact you to discuss it. The best thing to do with creditors is to send them a letter requesting they only contact you in writing so they don’t contact you by phone. Moreover, it’s extremely essential that you have yourself acquainted with your privileges below the two acts naming Fair Credit Reporting Act and the Fair Debt Collections Practices Act. Knowing your rights is your key to fighting collections representatives who often conduct themselves in roguish ways.
Once you have sufficient leverage against the company it is time to attempt a settlement. A rational objective would be to resolve the debt in 35 percent to 50 percent of the balance. Contact the bank or credit card company directly and they will likely transfer you to their collections department. Once in touch with the collections representative simply let them know you wish to resolve the debt. A typical scenario is that they will offer to settle for an amount ranging from 65% to 80% of your balance before you ever make a payment offer. Show them what you found out and make sure they understand why an initial offer of 15%-25% of the balance is fair. You may be told that they have to consult their manager but you must continue the negotiations until you have reached the range that you desire.
Some credit companies are easier to deal with when trying to settle credit card debt than other companies. For example, trying to settle for less than 60% with American Express is very hard to do. You can easily rate your credit card company or bank against others simply by browsing the internet.