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How to get rid of credit card debt
Everyone's debt circumstances are different and figuring out what methods work best for you starts with sorting out your debt. Whether your debt is secured or unsecured significantly effects the measures you can take to eliminate debt.
Secured debt is a loan which is "secured" by property. Simply put, if the bank can come and take something from you if you don't pay (for example, your vehicle and homestead) then the liability is protected.
Unprotected Debt Is Found To Be The Most Normal Type Of Debt Which Is Typically In The Form Of A Credit Card Debt.
Eliminating Unsecured Debt
The three most common ways to eliminate unsecured debt are
1.making payments as agreed upon
2).going bankrupt
3.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. Due to the changes to the Bankruptcy Law in 2004 by the Bush administration, estimates are that less than 10% of people who file for bankruptcy are successfully discharging any debt. Most have to pay it back now under Chapter 13.
Credit Counseling and Debt Consolidation services focus on how to eliminate debt by debt settlement and debt negotiation 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. However, this is something that can be done on your own, so that's good news.
Settle For a Lower Price than What is Currently Owed
Leverage is the secret to a triumphant settlement. If banks feel they can squeeze more from you, they won't agree to a settlement. 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. This is ideally dealt with from the start by sending a letter asking that they contact you only in writing. Also, it is very important that you familiarize yourself with your rights under the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. Collections representatives often behave in unscrupulous ways and knowing your rights is your key to fighting back.
You should attempt to make a settlement once you have sufficient leverage. A rational objective would be to resolve the debt in 35 percent to 50 percent of the balance. You'll probably be transferred to the collections department if you contact the bank or credit card directly. When you talk with the collection agent, you should tell them what you plan to do to take care of your 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. Let them know what you do have; an initial offer of 15%-25% of the balance is reasonable. 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.
There are some creditors which are more inclined to reconcile than others. For instance, American Express can be a very difficult company to settle with for less than 60%. You can easily rate your credit card company or bank against others simply by browsing the internet.
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