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Credit Card Debt Relief

Today, millions of people are seeking credit card debt relief. In previous years, consumers who possessed good credit scores could obtain credit cards from major credit card companies, gasoline companies, airlines and department stores. Creditors with poor credit ratings could obtain credit cards from subprime lenders who charged outlandish interest rates and drove debtors into a financial grave.

Today, numerous companies offer credit card debt relief. Many offer the promise of helping debtors obtain reduced interest rates and the opportunity to slash outstanding balances. Some claim they can help consumers get out of debt in a matter of months. Depending on credit card balances, it can take consumers a decade or longer to repay outstanding debt. The promise of becoming debt-free in months is enticing, but is it realistic?

The truth is, no one can completely eliminate debts overnight. Legitimate debt reduction companies can help consumers work out a repayment plan with credit card companies and other lending institutions. However, consumers must pay these companies a fee to negotiate on their behalf.

Debt settlement companies are well-connected within the finance industry and have established a good working relationship with multiple credit card companies. Creditors are sometimes willing to lower interest rates and reduce outstanding balances as long as consumers are financially able to abide by the proposed repayment plan. One missed payment could void the contract and cause debtors to owe more than the original amount.

Most debt reduction service providers can help consumers regain control of their finances and avoid filing for credit card bankruptcy. However, consumers must make every effort to investigate the company to ensure they are working with a trustworthy and reputable organization.

This can be accomplished by conducting research online or asking friends or family for debt settlement company recommendations. Start by contacting the Better Business Bureau at Also check with your states' Attorney General's office or Secretary of State. Conduct research to determine if the debt settlement company is licensed to conduct business in your state.

Consumers who carry a heavy credit card debt may have no other option than to file credit card bankruptcy. This option does not eradicate all debt and consumers are required by law to repay a portion of their debts.

In 2005, President Bush enacted the Bankruptcy Abuse Prevention and Consumer Protection Act to prevent consumers from filing frivolous credit card bankruptcies. BAPCPA requires debtors to undergo the 'means' test to determine the amount of debt to be repaid.

The means test is a financial tool which compares the debtor's income to their states' median income level. Debtors who earn more than the median income level will be required to file for Chapter 13 bankruptcy.

Chapter 13 is also known as "reorganization bankruptcy". Debtors are required to submit a repayment plan through the court. Repayment plans typically last between three and five years. During this time, debtors must submit payments to the bankruptcy Trustee who then distributes payments to creditors.

Debtors are prohibited from taking on any new debt during the repayment plan. If any Chapter 13 payments are missed, creditors can petition the court to have the bankruptcy dismissed. If the judge dismisses bankruptcy filings, debtors lose all protection from the court and creditors can commence with collection actions.

A smarter option to obtain credit card debt relief is through credit counseling. The Department of Justice U.S. Trustee Program provides a list of approved nationwide credit counseling programs via their website at

When possible, it is best to seek credit card debt relief through bankruptcy alternatives such as debt settlement, debt consolidation, credit counseling and budgeting. Our credit card debt relief article library offers a variety of articles on various debt relief programs, along with credible resources to help you overcome credit card debt.

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Published on September 23, 2009 at 02:16 AM

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