Credit Card Debt Consolidation
Credit card debt can add up quickly. If your budget only allows for the minimum monthly payment, the snowball effect of high interest and additional monthly charges can seem overwhelming. What would it take to achieve a zero balance? Try our free online calculator to find out. If you can’t reasonably pay off these credit card debts in a 2-3 year timeframe without compromising your budget (i.e., falling behind on mortgage payments, taking out another loan to cover the payments, etc.), then it may be time to seek professional help.
We offer debt elimination plans through the use of a Chapter 7 bankruptcy or a court-authorized debt consolidation plan through the use of Chapter 13 reorganization. Both programs provide court oversight and protection while you resolve your credit card and other debts. Call us today at 866-261-8282 for a free consultation to discuss your options for resolving your credit card bills and debt obligations. Discuss your questions over the phone or meet with one of our licensed attorneys at one of our convenient office locations in: Ann Arbor, Dearborn, Southfield, Flint or Warren, Michigan.
Credit Card Debt Consolidation Loan vs. Bankruptcy
Many people are reluctant to file bankruptcy before they have exhausted all of their other options. How do these options compare to bankruptcy and what is the downside to trying them first?
Many people make the mistake of consolidating all of their credit cards into one loan or worse, getting a Home Equity loan to pay off these debts. Why doesn’t this work? While it will likely simplify the bill paying process, the mere act of combining all of your debt into one monthly payment does not help to reduce the principal debt. Oftentimes credit card companies offer a low or no interest introductory rate to entice consumers to consolidate their debts. What they don’t tell you is that they’ve reserved the right to review your credit at any time and have the ability to increase your interest rates at any time, derailing your efforts to reduce and pay off your debt.
Through Chapter 13 reorganization, we are able to offer distinct benefits:
- Full debt consolidation, not just your credit card bills. All debts (medical bills, personal loans, second mortgages, etc.) can be consolidated and most often significantly reduced. Whatever portion is left unpaid at the end of the program is legally eliminated.
- 0% interest repayment on all unsecured debts and debt arrearages.
- Pay what you can, eliminate the rest. We establish a monthly budget that focuses on paying your most important bills: 1st Mortgage/rent, vehicle expense, utilities, food, clothing, etc. Your unsecured creditors only get whatever is left over after we have provided for all of your monthly living expenses. Most often, you get a substantial reduction for these debts and the unpaid balance is legally discharged by the court at the completion of the program.
- Court protection from your creditors. Your creditors are unable to call you or proceed with judgments while you are under the protection of Chapter 13 reorganization.
- Creditors are bound by the bankruptcy laws and don’t have the ability to “opt out” of the reorganization plan. If a creditor “opts out” by not filing a claim with the court in order to get paid, the debt is discharged. Oftentimes, creditors will refuse to participate in certain debt consolidation plans. They do not have this option when a Chapter 13 is used to reorganize and eliminate debt.
- Improved credit by reducing your debt-to-income ratio throughout the program and restoring timely payments to your creditors. These two factors alone influence 65% of your credit score according to FICO.
Sometimes after meeting with a client, we realize that they are simply unable to pay back their debts at all. If at the end of each month, you do not have $200 or more to pay toward your unsecured debt (e.g., credit cards, medical bills, signature loans), a Chapter 7 fresh start may be necessary to simply eliminate the credit card and other unsecured debt to give you a fresh financial slate.
Don’t continue to spin your wheels playing the “shell game” with your credit card debts. Call a qualified attorney at Acclaim Legal Services today to discuss your options for full debt resolution. We can provide you with debt reduction and elimination, court protection from your creditors and the opportunity to improve your credit and make a fresh start. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.