Credit cards are one of the commonest causes of consumer debt. The ease with which they can be obtained and the fact that handing over a plastic card is so removed from the reality of handing over cash, are a fatal combination. The almost inevitable result of these things is that it is all too easy to build up substantial debt from credit cards.
Once you recognise that you have gone beyond a bit of advance borrowing into a situation that has become impossible to deal with, it is time to take action to wipe out your credit card debt. The one good thing about credit card debt is that it is the type of debt that is well suited for being dealt with by various debt reduction schemes.
Credit cards are a form of unsecured debt, which means that it suitable for being tackled through debt management or debt settlement plans. Unsecured debts are simply those not secured to an asset. A mortgage, for instance, would be a secured debt, and therefore not suitable for inclusion in a debt plan.
Depending on your exact circumstances, there are three main options open to you when you want to wipe out all your credit card debt. The two main routes are either debt management or debt settlement, and with debt settlement you also have the option of trying to do it yourself, which is the third option.
Debt management is most likely to be suitable if your debts are substantial, but you still have enough money coming in to be able to afford a reasonable monthly payment towards them. Under this approach a debt management plan will be set up by an appropriate company, which will result in you just having to make one single payment to the company, instead of to all your creditors. The payment should be less, due to the debt management company having renegotiated the terms of your debts.
If you are in a more serious situation, perhaps so bad that you are having to consider bankruptcy, then debt settlement may be the appropriate route for you. This is a more radical approach, which depends on negotiating for substantial reductions on your debts. When this works properly you should expect to get up to 60% written off the value of your debts.
Now you are wondering why a credit card company would agree to wipe out such a large proportion of your debt. The encouragement for them to do this is usually the offer to pay off the new amount in one go. The advantage for them is that they get something rather than nothing and they get it quickly. Most people who go into debt settlement do not have funds available for making large payments, so what happens is that you pay an amount each month into a new account, instead of paying anything to your creditors. Negotiations can take some time, so while this is going on, your money builds up and is used as each new settlement is reached.
A good debt settlement company will just take a proportion of what they save you as their fee, but you may wish to save this money by doing the negotiation yourself. This is a good idea, provided you go into the process fully aware that it is not straightforward and that you are going to need help. There is help available in various forms online, including detailed guides covering template letters, scripts for phone calls and detailed advice on exactly what to do when, in order to achieve the best results.
You will not find debt settlement as such in the UK because they have Individual Voluntary Arrangements, or IVAs, which essentially get you the same result. With an IVA you make a regular payment towards your debts, but after a fixed period the rest of your debts are waived.
If you choose to use either a debt management or debt settlement company to help you wipe out all your credit card debt, you should exercise some caution with regard to how you select the company you use. You may or may not know that not all debt companies are honest or trustworthy, so you need to stick to ones that have been in business for some time and which have already successfully dealt with a great deal of personal debt.
The simplest way to be safe in your selection is to start with recommendations for the best companies, which are proven to be reliable and honest. Get together a list based on safe companies and apply to several to see what responses you get. This will allow you to compare proposals and make a sensible decision about which company is most suitable.
Wipe Out All Credit Card Debt Using Debt Settlement Negotiation
Read advice on how to negotiate debt on the author's website, where you can also find recommendations for the most reputable debt settlement companies. K D Garrow has worked as a senior manager with significant financial responsibility for the last twenty years. His website offers free, unbiased advice on a range of debt related issues, including the debt management plans, UK IVAs, budgeting advice, loans and bankruptcy.
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