Maria Adams, Credit Cards Moderator
@m_adams
A credit card debt relief program is an arrangement designed to help you manage and reduce your credit card debt. Several methods can achieve debt relief, including debt settlement, debt management, debt consolidation, and bankruptcy.
Debt settlement involves negotiating a lower repayment amount, while debt management is the process of restructuring debt under a more favorable payment plan with lowered interest or waived fees. Debt consolidation allows you to use a a low APR loan or balance transfer credit card to pay off your balance without worrying about interest charges. Bankruptcy is a process where a judge decides the outcome of debt based on the debt holder’s financial situation.
Credit Card Debt Relief Programs
| Program | Debt Status | Credit Impact |
| Debt Settlement | Already defaulted debt Cannot make the min. payment | Severe if you have not already defaulted No additional impact if debt has already been defaulted |
| Debt Management | Barely able to meet min. payment | Negative impact but not as severe as defaulting or filing bankruptcy |
| Debt Consolidation | Struggling to meet min. payments, but have not fallen behind | Potential to add additional debt if you're not disciplined |
| Bankruptcy | Cannot make the min. payment | Severe impact (stays on your credit for up to 10 years) |
You can learn more about the different alternatives for credit card debt relief in WalletHub’s debt solutions guide. Keep in mind that, the ideal debt relief solution will vary based on your priorities and the nature of your debt. For example, if debt forgiveness is most important, debt settlement and bankruptcy will be your only options. On the other hand, if you want your credit score to suffer minimal impact, debt consolidation will probably be your best bet.
When choosing the right credit card debt relief program, carefully review your finances, understand what you can afford, and what risks you are willing to take. Once you’ve made a decision, read the fine print on any agreements and factor in any fees associated with your selected option.
People also ask
What is the difference between debt relief and debt consolidation?
The biggest differences between debt relief and debt consolidation are the number of options available for resolving debt and the credit-score impact. Debt relief is a term used to describe a variety of solutions available for debt resolution, including debt consolidation. Debt consolidation is a specific method of debt relief that involves merging multiple debts into one large balance with a single monthly payment.
Debt consolidation is a very popular method of debt relief, but...
read full answer by Mary Grace McCormick, Credit WriterIs debt settlement worth it?
Debt settlement is worth it when a fair settlement can be reached quickly, allowing the borrower to satisfy their obligation for less than the full amount due by making a lump-sum payment that they can comfortably afford. It’s best if the borrower does not need a good credit score for anything important, such as a mortgage application, in the months that follow, either. But debt settlement involves an enormous amount of risk. There’s the risk that...
read full answer by Mary Grace McCormick, Credit WriterWhat are the pros and cons of debt consolidation?
The biggest pros of debt consolidation include the potential to save a lot of money and the simplicity of having fewer monthly payments to deal with. Notable cons include short-term credit score damage, the possibility of fees, and the risk of actually adding to your debt load in the long run. Plus, it’s difficult to get a good deal on debt consolidation without a credit score of 660-700 or higher.
So, the practice of...
read full answer by Adam McCann, Financial WriterDid we answer your question?
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