Credit Card Debt Bankruptcy: 3 Legitimate Debt Relief Options to Avoid Bankruptcy

Considering that we have just come out of one of the worst economic downturns since the Great Depression, there are more consumers and small businesses on the brink of credit card bankruptcy than ever before. However, before filing for bankruptcy, it is very important that you consider your debt relief options. Here we take a look at the top 3.

1. Credit counseling

Credit counseling can be a good option for consumers and small businesses with multiple high-interest lines of credit. Instead of paying off all of these high-interest cards separately, credit counseling programs can negotiate and lower interest rates for one monthly payment. This payment will generally be equal to the sum of all your minimum payments, and you will repay the full amount usually over a period of 5 to 9 years.

2. Debt consolidation

Debt consolidation may make sense if you want to trade your unsecured debt for a lower interest secured loan. You’ll repay the secured consolidation loan at a lower interest rate, but if you default, you could end up losing your security, usually a home or car.

3. Debt settlement

Debt settlement can make financial sense for consumers and small businesses that are experiencing financial difficulties and are on the brink of bankruptcy. Debt settlement is considered the best alternative to filing for bankruptcy and is only intended for those who are struggling or anticipate struggling to meet all of their minimum monthly payments. Typically, those who qualify for debt settlement will be able to eliminate around 40-60% of their unsecured debt while avoiding many of the consequences of filing bankruptcy for credit card debt.