How to Eliminate Debt

Everyone's debt circumstances are different and figuring out what methods work best for you starts with sorting out your debt. There are a variety of ways you can handle and eliminate credit card debt.  The nature of your debt - secured or unsecured - may play a big part in determining what means are available to you.

Secured debt is a loan which is "secured" by property. Simply said, the bank is allowed to take away from you a property you own if you don`t pay. (ie; house, auto)
so the debt will be secure.

Unprotected Debt Is Found To Be The Most Normal Type Of Debt Which Is Typically In The Form Of A Credit Card Debt.

Getting rid of unsecured debt
There are 3 primary ways to get rid of unsecured debt, and they are
I.)paying as decided
2.going bankrupt
3.There are methods of resolution like debt settlement and negotiation.  These involve paying a percentage of the amount actually owed.  So you can see that bankruptcy is not a necessary solution. Due to the changes to the Bankruptcy Law in 2004 by the Bush administration, estimates are that less than 10% of people who file for bankruptcy are successfully discharging any debt.  Chapter 13 requires that the majority of people pay it back.

Consolidating or counseling focus on the elimination of debt by coming to a set amount with your creditor, that is less than what you actually owe. The services you can use to eliminate your debt are often owned by banks and credit card companies and they usually charge you a fee. However, this is something that can be done on your own, so that's good news.

Settle credit card debt For Less than the Balance Due

The key to a successful settlement is leverage. If a bank thinks they can get more out of you, they will not settle. This means that you may have to go months without making any payments. This will reflect poorly on your credit report and affect your credit score, but it is a necessary to obtain a good settlement.

During this period, you will not be making payments to your credit card company but they will be trying to contact you to discuss the situation. This is best dealt with from the very beginning by sending them a letter requesting that they only contact you in writing. Also, it is very important that you familiarize yourself with your rights under the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. Knowing what your rights are is the key when dealing with unscrupulous collection representatives.

When once you have acquired sufficient leverage against the company then it is time to try a settlement. A realistic goal would be to settle the debt for between 35%-50% of the balance. Contact the bank or credit card company directly and they will likely transfer you to their collections department. When you talk with the collections representative communicate to them that you are ready to pay off the debt. A typical scenario is that they will offer to settle for an amount ranging from 65% to 80% of your balance before you ever make a payment offer. Show them what you found out and make sure they understand why an initial offer of 15%-25% of the balance is fair. They may tell you no or tell you that they have to speak with their manager but continue the negotiation as necessary to settle within the range that you desire.

Some credit companies are easier to deal with when trying to settle credit card debt than other companies. For instance, American Express can be a very difficult company to settle with for less than 60%. You can easily rate your credit card company or bank against others simply by browsing the internet.