Credit card debt relief programs come in many forms. When you consider each person can have a very different set of financial conditions and goals it makes sense that there are different forms of credit card debt relief programs to meet those specific conditions and goals. There is no one size fits all program.

In general credit card debt relief programs will range from being very conservative and offer minor relief, to very aggressive and offer the most relief. IF successful. There are always pros and cons to consider when evaluating what is the right solution for yourself and we’ll list the top items consider.

Below are general descriptions of common credit card debt relief programs. We want to be absolutely clear, the following is not financial or legal advice, this is a starting point to help you begin your research to  understand what your credit card relief options are. Always speak to a licensed financial and or legal professional before making any final decision.

Debt Settlement programs also known as debt negotiation programs are specifically targeted to deal with unsecured debts such as credit cards but can include department store credit cards and medical debts. The general model for this program is that the consumer has credit card debt, medical bills or other unsecured debts they are not able to pay and want an alternative to filing bankruptcy.  Unsecured creditors are generally last in line to collect from a consumer if they file for bankruptcy. Therefore if a consumer files for bankruptcy, the creditor is at a high risk to collect ZERO of the amount due to them.  Reason stands that if the credit card debt is the primary reason the consumer will need to file bankruptcy, if the creditor is able to significantly reduce that debt so the consumer can pay it off, then they can avoid bankruptcy and the creditor recovers at least a portion of the debt due to them. This is “settling a debt”.  So how do you work with a credit card company to reduce and settle a debt? This is where a professional debt settlement company can help.  These are professionals who have ample experience in working with creditors to settle debts of a consumer.

Debt Settlement Pros

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Debt Settlement Cons

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Credit Counseling programs are almost always the first part of a two part service offered by credit counseling companies. A credit counseling company will offer free consumer financial education as well as a free credit counseling session to evaluate your financial situation and offer solutions. These counseling sessions are mainly geared to helping people with common debts like credit cards, utility bills, loans, car loans, medical bills and more. They are not specialists in more complex areas of debt like tax law, home foreclosure, investment or business losses, although they will likely be able to refer you to an expert in the appropriate area.  Your credit counseling company will bring together a budget to see if you’re able to pay your bills on time through better money management, or if your expenses far exceed your income and you need to gain relief from your creditors. In the case of the latter, they may recommend you join a debt management program, which is a service that is normally also offered by them and it is NOT free, but is low cost. Read more below:

Debt Management Programs

Debt management services have special agreements with many creditor companies and often will have an agreement with your creditors to make concessions on your debts. These agreements may include concessions such as lowering your interest rates, reducing or removing late fees and over the limit fees. They do this with the goal of lowering your monthly bill so that you are able to make on-time payments and stop falling further into debt… headed towards bankruptcy. After your full analysis your debt management company will tell you what your new monthly payment will be after these concessions are in place. In this program you will be sending a payment to cover all your bills in the program to your debt management company and they in-turn will pay your creditors the amounts due. So although your debts are not actually consolidated, in a way your payment IS, because now you only have to pay one bill and all those bills in the program get paid.

Credit Counseling Debt Management Pros

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Credit Counseling Debt Management Cons

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