Credit card modification programs include credit card settlement and consumer credit counseling. A third debt relief option would be to consolidate your debt with a loan or refinance it, but today’s options don’t consist of using a loan. Credit card modification programs allow you to reduce the amount owed on credit card bills.
Option 1: Consumer credit counseling credit card modification
A consumer credit counseling program allows you to stay current on your credit card payments. Your creditors will reduce the interest rates, resulting in you getting out of debt faster (Debt free in approximately 4.5 years). You are responsible for only making one monthly payment to the consumer credit counseling company each month and they will pay your creditors out of that payment.
Consumer credit counseling credit card modification PROS
- late fees can get waived and account payments brought back to show “current” (helping improve credit scores)
- all payments consolidated into one single payment
- debt free in around 4.5 years
Consumer credit counseling CONS
- it takes longer than a debt settlement program to get out of debt
- a “cc” notation goes on credit showing that you needed to hire a consumer credit counseling agency (future creditors look down upon this notation because it shows that you couldn’t manage your debt on your own)
- credit cards get closed out, which can hurt your ability to borrow (credit scores can improve, but your creditworthiness can get adversely affected)
Option 2: Debt settlement credit card modification
These next two credit card debt relief options require you to be delinquent on credit card payments to the point where accounts eventually go to a third-party collection agency. At this point, your original creditor is reimbursed 100% of what’s owed and sometimes will earn even more, then selling your account to a collection agency for additional profit. The good news is that the collection agency only pays 10-20% of the debt to purchase it. Therefore, collection agencies are willing to settle for around half, allowing you to save around 50% on your debt through this next credit card modification program.
Debt settlement is when negotiators offer each of your creditors around 50% of what you owe to settle the debt. That means you only have to pay around half of what you owe, not including whatever the debt settlement company fee is. This option is similar to a mortgage loan modification.
Debt settlement credit card modification PROS
- Save around 50% more than with consumer credit counseling
- Debt free in around 3-4 years
- Get one single and affordable payment, lower than with consumer credit counseling
- Get legal protection and stop creditor harassment if you use an attorney model debt settlement program like what is offered through Golden Financial Services
Debt settlement credit card modification CONS
- credit score gets negatively affected
- creditors could issue you a summons to go to court (if you skip court that could result in a default judgment hurting your credit score even more and possibly getting wages garnished)
- creditors may harass you (if you hire a lawyer to settle your debt it’s illegal for creditors to continue calling you)
- could owe taxes on the amount saved (this can be avoided by using a #982 tax form, which you can learn about at Louisiana debt relief)
What about a debt validation program?
We saved the best for last, for those of you who are past the point of returning to getting current on monthly payments.
Before using a debt settlement program use debt validation.
Debt validation doesn’t modify the terms of your monthly payments like with the above-mentioned credit card modification programs but instead, it challenges the validity of each of your debts.
Surprisingly, debt collection companies can almost never prove a debt is valid. As a result, debt validation can be your least expensive solution to credit card debt. Credit repair and a money-back guarantee are both included in debt validation, which neither debt settlement nor consumer credit counseling includes.
Debt validation isn’t saying that you never spent the money, it’s challenging your creditors to make sure they are following all applicable laws, and that they are maintaining complete and accurate documentation that federal laws require.
Here’s an example of how debt validation works: If a debt collection agency fails to,
A. produce all of the necessary proof that they are legally authorized to collect on a debt (including an active collection agency license to collect on a debt in a particular state)
B. provide proof that what they claim you owe is accurate and void of any unauthorized charges & related fraud (by producing a complete trail of accounting records, including the original agreement that you signed with your original creditor)
– The debt becomes legally uncollectible and you don’t have to pay it.
As an additional benefit, the debt can no longer legally remain on credit reports.
How to Get Credit Card Assistance?
Your first step to obtaining credit card relief should be to speak with an IAPDA certified debt counselor.
You can call (866) 376-9846 and get your free consultation right now.
During your consultation, you will get a quote on each debt relief program and can easily figure out what your best route will be. Here at Golden Financial Services, we can assist you with enrolling into a debt settlement, validation or consumer credit counseling program. Call now to learn about credit card modification programs!