Credit Card Debt Programs

What’s the best way to resolve your credit card debt?

Whether you only have a little credit card debt, or you're dealing with a lot of it, you’re probably aware of the significant emotional and financial costs that come with it.

And if you’ve been struggling, you want to get out of credit card debt as quickly as possible but may not know the way out.

What are the top credit card debt solutions?

Sometimes we all need a little push to help us get out of credit card debt. The right tool or program can be just the thing you need to start making real progress towards financial freedom. These are the four most well-known methods of repaying credit card debt (beyond just handling it on your own). While there are other ways to approach debt management, these are the preferred credit card debt relief programs to turn to when you’re stuck in a cycle of debt.

Debt Consolidation

DMP vs consolidation loan Debt consolidation is a blanket statement that covers a variety of methods (including debt management plans). The basic premise is always the same, though: you take multiple debts (usually unsecured credit card debts) and bring them all together, either as a loan, a credit card balance transfer, a mortgage refinance, or something else.

The big benefit of debt consolidation is that all of those accounts — with their different payment amounts, different due dates, and different interest rates — become one payment (ideally with a lower interest rate). As with any credit product, though, the better your credit score, the better the terms you’ll be able to score. If your credit’s a bit subpar, you may have a hard time qualifying for something that actually helps you save money.

Learn more about debt consolidation

Debt Management Plan

Learn more about debt management plans from MMI. A debt management plan (or DMP) is a form of debt consolidation usually offered through a nonprofit credit counseling agency like Money Management International. The credit counseling agency works with your creditors to reduce your interest rates and set a monthly payment that fits your budget. You make deposits to the credit counseling agency, which then makes monthly payments on your behalf.

You don’t need a high credit score to qualify for a DMP and plans are typically designed to be completed within five years, which makes it an appealing option for anyone who’s missed a few payments or simply wants to accelerate their credit card repayment.

Learn more about debt management plans

Debt Settlement

DMP vs debt settlement The major advantage of debt settlement is that you’re only paying off a portion of your credit card debt. Working with a settlement company or handling your own negotiations, you work out an agreement with the creditor to pay back a certain percentage of the debt, usually in one lump sum or a small number of payments. The unpaid debt is considered forgiven, and while it may have tax implications, you won’t have to pay that portion off.

Debt settlement usually causes major damage to your credit score, so it’s typically only recommended if you’re already extremely delinquent or if paying in full isn’t feasible.

Learn more about debt settlement

Bankruptcy

DMP vs Bankruptcy Bankruptcy is an important tool for when your credit card debt has gotten so out of hand, none of the other options are remotely viable. Filing for bankruptcy is a difficult (and potentially costly) process, but it’s a perfectly valid option, especially when unsecured debt begins to threaten your home and livelihood.

There are two kinds of bankruptcy: Chapter 7, where the included debts are wiped out, and Chapter 13, where you end up repaying a portion of the included debts through a repayment plan. If the court determines that you have the “means” to repay at least some of your debts, you’ll likely end up having to file for Chapter 13 bankruptcy. No matter which option you’re interested in, if you’re considering bankruptcy you should speak with a qualified attorney.

Learn more about bankruptcy

So, what’s the best way to get help with your credit card debt? It really depends on your situation. Your credit card debt is just one piece of the puzzle. You have other bills and financial obligations, as well as your income to consider. Not surprisingly, it is more difficult to overcome debt and other obstacles the less money you make.. If you are in this position, you may need help with your credit card debt.

To find the best credit card repayment solution for you, we need to figure out what challenges you're currently facing.

What best describes your situation?

You’re not behind on anything, you’d just like to be out of debt faster

You’ve paid your bills on time, and you can make your monthly minimums, no problem. You’re just looking to get out of credit card debt ASAP. If you’ve got strong credit, you may be able to save time and money with a debt consolidation loan. This option allows you to condense all your debts into a single monthly payment. If your credit’s a little dinged, you can get the same benefits with a debt management plan. This isn't a loan, so there's no credit requirement, but it does prevent you from opening more lines of credit while you’re making payments.

Your main problem is your high credit card interest rates

If high interest rates and monthly charges are making it impossible to make any progress on your credit card repayment, you may be able to get better rates with a debt consolidation loan (if you qualify) or a debt management plan. These repayment options help you with your credit card debt by consolidating your payments into a single, manageable monthly payment.

You’re having trouble making your monthly credit card payments

If you’re struggling to make payments each month, things certainly don’t get any easier when creditors start adding fees or increasing your interest rate for missing payments. A certified, nonprofit credit counselor can help you with your budget, but ultimately a debt management plan may be the best fit.

You’re receiving collection calls and deep in debt

A big medical bill, a temporary loss of income - it’s really easy to get into a hole and often really hard to get out. If you’re way behind on your bills and getting regular collection calls, you may want to pursue a debt settlement or start a debt management plan.

You’re worried about losing your house, car, business, etc.

If your debts and other financial liabilities greatly outweigh your assets and things just seem to be getting worse, you may want to talk to a qualified legal professional about filing for bankruptcy.

You have no income to pay off your credit card debt

If there’s no money coming in and no way to support any kind of repayment plan, your best bet may be to speak with a qualified legal professional about filing for bankruptcy. In the meantime, talk to a certified, nonprofit credit counselor to get connected to resources and programs to keep you safe.

At MMI, we know a lot about budgeting and debt repayment in general, but our specialty is debt management plans. We have decades of experience helping people pay off debt with a DMP. Our confidential debt relief programs can help you with credit card debt and get you on a path to financial freedom.

Learn about a Debt Management Plan from MMI.

Get the 411 on debt management plans

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