Credit card debt spending has increased throughout the USA due to the financial constraints caused by COVID-19. Texas leads the pack behind California for states with the highest credit card debt increase, according to a Sept 21 study by WalletHub. And low mortgage interest rates have not translated into low credit card interest rates. Shockingly, the median interest rate across all credit cards in the Investopedia card database for October 2021 is 19.49%.
These high-interest rates can create financial pain for people carrying substantial credit card debt. The high payments can make it impossible to cover the rising living expenses. Debtors who have fallen behind face non-stop collection calls and sometimes followed by debt-collection lawsuits. Fortunately, there are solutions to this overwhelming debt. Let us take a look at the most common options.
Secured or Unsecured Debt Consolidation Loans:
Unsecured debt consolidation loans involve taking out a lower interest loan to pay off the higher interest credit card debt. Since these loans do not have collateral that the lender can foreclose or repossess, they require high credit scores and excellent debt-to-income ratios to reduce their risk. Most secured debt consolidation loans use home equity as collateral. In Texas, your home must be kept under 80% when using equity, so not all of the equity is available in a refinance or 2nd mortgage. However, if you have enough equity, the credit score requirements are lower than an unsecured loan since your home is collateral.
Debt Management Plan with Credit Counseling:
A credit counseling program can provide some of the benefits of a debt consolidation loan, including the need only to make one payment per month and lower interest rates. There is no need to take out a new loan since the rates with your existing debts are reduced, so good credit scores are not required, but you must afford the monthly payments. However, this is considered a “hardship” program, so if you want to take on more debt (and have the ability to pay for it), then this is not a program you should consider. Depending on your current interest
rates, the monthly payment is likely to be less than your combined minimum payments, and these programs are designed to pay off the debt in about five years or less.
Debt Negotiation for Debt Relief
Debt negotiation, also known as debt settlement, is another common way to resolve overwhelming credit card debt and personal loans. It is a hardship program, and similar to credit counseling, it is not an option if you plan to apply for more debt before you have completed the program. These programs are usually structured to last an estimated 24 to 48 months, depending on your monthly budget and the negotiated amounts. The monthly program payments may cost less than half in comparison to making minimum payments. A reputable program will not charge negotiation fees until a debt is settled.
The savings are a result of not making monthly payments to your creditors. Instead, money is deposited into an FDIC-insured special purpose account while the debts are negotiated and settled for less than the total balances one at a time. The program is ideal for those about to fall behind, or those who have already fallen behind since not making minimum payments will negatively affect a credit score. However, this can be a great alternative to bankruptcy, and since the program can be completed much quicker than most other options, you can also start rebuilding your credit score quickly. Not all debt negotiation programs are created equal. Debt Redemption’s negotiation fees are often 20 to 40 percent less compared to out-of-state companies. They also have special resources to assist Texans who have been sued by a creditor or debt collector.
Chapter 7 or 13 Bankruptcy:
Bankruptcy can be the shortest and least expensive way to resolve debt if you can qualify for chapter 7. Many people with significant income or non-exempt assets run into problems that prevent filing chapter 7 and chapter 13 could be the only form of bankruptcy available. In some cases, chapter 13 will be more expensive than a debt negotiation program, and in other cases, it will be less expensive. If you are going to consider this option, then a consultation with a Texas bankruptcy attorney is needed. Debt Redemption does not give legal advice.
Get a Free Debt Relief Consolidation
Affordable Debt Consolidation in San Antonio, Texas, also has multiple offices in the Lone Star State to assist Texans struggling with overwhelming debt. If you are considering debt consolidation loans, credit counseling, or debt settlement, a Texas Debt Specialist can provide you with a free no-obligation phone or office consultation. We can also refer to Texas bankruptcy attorneys when needed. Learn about your options to resolve debt today so you can start living your life debt-free. Call 800-816-1003 or visit https://affordabledebtconsolidation.com
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