Which Credit Card Debt Solutions will work best for you?

   Searching for a credit card debt solution? Do you need to get out of credit card debt now? The good news is that you have options to become debt free but, the bad news is that there are not many. Here are the most common used options for debt relief.

Consumer Credit Counseling (CCCS):

   Back in the 1990's this method of debt relief used to be very popular among debtors. However with the economy in 2009  slipping into a recession and with Americans making less money this credit card debt solution has lost it's appeal.

   In the early 1990's the vast majority of banks cut their interest rates to zero and accepted only 1% of your balance as a minimum payment! But by the late 90's with the help of the internet the word spread and Americans flocked to this type of program for their credit card debt solution.

   Naturally benefits of a 1990's credit counseling program were very popular and most people used this type of program for their credit card debt solution. But by 2002 the Banks changed the rules! No more 0% interest and no more 1% of the balance to pay your monthly minimum payment.

   The average interest rate on a credit counseling program in 2009 now may run between 10-15%, some won't drop it at all! Also they now require over 2% of your balances monthly and if your over 6 months past due to the original creditor they will not accept you on the program at all!

   Most people cannot keep up making payments equal to or higher than what they are currently paying now for the expected 5 to 7 years it takes to complete a CCCS program. That's why over 70% fail!

   The bottom line is you must be financially stable to enter this type program because if you miss one payment you can risk being removed from the program and lose the benefits. So for those who are struggling to make the payments now, this will not be right program for your credit card debt solution.

Debt Consolidation Loan:

   A loan is what most people think of first when searching for a credit card debt solution. This normally requires that you have collateral to obtain this type of a loan. Many times the debtor will have to take the loan out against their home. So if you do not have assets such as a home for collateral this option will not work at all.

   Second in 2008 lending requirements have become extremely strict to obtain a loan, even if you have perfect credit. Problem for most debtors is that even if you have never missed a payment your high credit card balances will severely lower your credit score putting you at higher risk.

One more thing to consider is this method is truly not one of debt relief or debt reduction, but more of a debt transformation. Essentially what you will be doing is taking your lower risk unsecured credit card debt and transforming it into a much higher risk secured debt. So if you default on the loan you may lose your home.  Statistics have shown that over 80% of people who get debt consolidation loans withing 5 years end up back in credit card debt, except this time they also have a second secured loan that must come take priority over the new credit card debts.  This forces many people into bankruptcy or they run the risk of losing their home.

Debt Negotiation otherwise known as Debt Settlement:

   Over the past 4-5 years this method of debt relief has become increasingly popular, especially for people in 2009 who are in default due to the economic climate.

   This method of debt relief involves negotiating a settlement with your creditors to pay back the debt at a much lower amount than owed. The benefits of this program are getting out of credit card debt quickly and saving money.

   To consider debt settlement you must be in default on the debts or be willing to go into default. The creditors are not willing to negotiate on an account if your current. They would prefer you to stay on their credit treadmill for 30 or more years paying high interest. Not until you are not paying them on a monthly basis will they start talking in terms of negotiating a settlement.

   During the beginning of this process your credit score will suffer but the damage done is not permanent and your score will improve once you have settled the accounts.

   You must understand that if you find yourself over your head in debt your number one priority should be to get out of credit card debt now! Not worry yourself with how you will obtain more debt in the future.

   If you are considering debt negotiation as a strategy to get out of credit card debt now it would be wise to consider hiring a professional debt negotiation service.