Finance Articles

We here in U.S are on the verge of experiencing a major credit problem. The sum of consumer debt has hit an all time high and we are approaching what may be a recession. This is leaving a great number individuals with less money in there wallets and more debts that they have to pay on. In this article I will review the pros and cons of the diverse available systems of credit card debt relief.

Credit Counseling Programs:

Pros- Consolidate monthly payments, lower APR, fixed payment structure.

Cons- Takes a long time to pay off, not easy program to maintain, low graduation rate, hard to obtain mortgage on program, usually payments are close to what minimums were before joining, the creditors will kick you off the program if one payment is late or missed.

Bankruptcy:

Pros- A full discharge of debts owed if you qualify for a Chapter 7, the collectors cannot call and harass.

Cons- Long term negative effect on credit score, made a public record for the rest of the debtors life, change in bankruptcy law made Chapter 7 very hard to qualify for, if forced into Chapter 13 court dictates how much you must pay for how long, debt has no say.

Credit Debt Settlement :

Pros- Great savings on debt amount owed, by far quickest route of getting out of debt, not made a public record.

Cons- Temporary negative effect on credit, dealing with collectors,possible legal action could be taken by creditors.

All of the above methods do have their respective pros and cons. However what really determines which option is right for you really depend on the current financial well being that you are in. For people swamped deep in debt but have income to pay a portion of it off then debt settlement would be best, to help escape bankruptcy. Those who have lower debt amounts and have no issue making the payments they currently have plus more, than credit counseling is a better course of action. Then of course for some the only course of action is bankruptcy.

Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.