Credit Card Debt Relief
If you have a mountain of credit card debt, you’re certainly not alone. The majority of Americans have some amount of credit card debt. If you’re feeling hopeless and chronically stressed every day due to your credit card debt, it’s okay to ask for help. Eric Wilson Law LLC provides top notch debt relief services to the people of Tuscaloosa, AL and beyond. We are here to help you achieve a life of financial security, happiness, and credit card debt relief. Call 205-349-1280 to schedule a free consultation.
What is Credit Card Debt?
Let’s start with the basics. Credit card debt is one of many types of unsecured debt and revolving debt. This means that you don’t have to offer collateral in exchange for money. This also means that you can basically keep borrowing money as long as you pay back enough where your credit limit is never exceeded. So if you consistently spend more than you can afford, then your credit card bills can easily get out of control. The worst part is that credit card companies will charge you interest on unpaid credit card debts, which can cause even more credit card debt.
Credit Cards vs. Debit Cards
If you’re new to the world of adulthood and financial management, you may be wondering if credit cards are different from debit cards. The answer is yes. When you use a credit card, you’re basically taking out a personal, unsecured loan with the understanding that you eventually have to pay it back at the end of the month. If you don’t, you’ll be hit with a 13% to 20% interest rate.
Meanwhile, when you use a debit card, you’re using your own money from your bank account. If you didn’t put enough money in your bank account, then you can’t buy anything with your debit card.
How Many Americans Have Credit Card Debt?
Unfortunately, most Americans have credit card debt. In fact, nationwide credit card debt totaled $841 billion in the first quarter of 2022 with the average cardholder having at least $5,700 in credit card debt during that time.
During the first year of the COVID-19 pandemic, national credit card debt actually decreased substantially from the last quarter of 2019. It went from $930 billion in Q4 2019 to $890 billion in Q1 2020.
Americans who are over the age of 75 have the most credit card debt out of any other age group – approximately $8,000 on average. Meanwhile, Americans under the age of 35 have the least amount of credit card debt with an average of $3,700.
Consequences of Too Much Credit Card Debt
It’s important to understand that credit cards are not just “free money.” Too much debt can cause significant financial hardship. A few common consequences of too much credit card debt include:
- Going into collections
- Having poor credit history, credit utilization ratio, and credit scores
- Having high interest rates on your credit card debt, making it more difficult to pay off
- Enduring wage garnishment, which is when debt collectors and creditors take money directly out of your paycheck in order to pay off your debt
- Enduring creditor harassment
- Struggling to pay for your basic necessities like rent/mortgage, groceries, gas, etc.
- Having chronic stress every day
When You Should Seek Credit Card Debt Relief
It’s difficult to know when to reach out for help for anything in life, especially when it comes to out of control credit card balances. You should seek help for credit card debt relief if:
- It’s highly unlikely that you could pay off all your unsecured debts (medical bills, credit cards, or personal loans) in the span of 5 years, even if you moved in with family to save on rent and/or cut out the majority of your spending.
- Your unsecured debt equals more than half of your gross monthly income.
If this sounds like your current financial situation, it’s okay to ask for help. Eric Wilson Law LLC offers financial counseling and debt relief services that are tailored to your specific needs. Contact our team today and we can help you get on the path to financial freedom.
Beware of Credit Card Debt Relief Scams
You are in a vulnerable situation by being financially unstable. Some debt settlement companies and credit counseling agencies know this and will try to take advantage of you anyway. Before you start the credit card debt relief process, it’s crucial to recognize this fact and do lots of research before making any huge financial decisions.
Some debt relief and debt settlement programs sound great before you get into them and realize that you cannot complete them for whatever reason. In many cases, this means that people will have even more debt on top of their pre-existing debt. That’s because some credit counselors and debt relief programs will make huge promises and charge you a large amount of money before even starting their program. In order to avoid scams like this, make sure you ask these questions:
- What do I need to qualify for this debt management plan?
- What kind of fees do I have to pay before starting this debt management program?
- Which of my creditors will get paid? And how much will they get paid?
- If one or more of my debts are in collections, who owns them?
- What are the tax implications associated with this debt management plan?
Eric Wilson Law Offices in Tuscaloosa, AL is not a debt relief company or a credit counseling agency that will try to take advantage of people who are already financially vulnerable. Instead, our team will fight for your financial protection and security. Before you potentially spend lots of money on a debt relief program, you should seek financial guidance from Eric Wilson first. He truly has your best interest in mind, and will relieve you from your financial stress.
Credit Card Debt Relief Options
Before you meet with a credit counselor or reach out to a debt settlement company, it’s important to know what your credit card debt relief options are first. Listed below are just a few options you can consider when it comes to paying off your credit card debt.
The first option is filing a personal bankruptcy petition through Chapter 7 or Chapter 13. Many people think that bankruptcy is a last resort debt relief option that ruins your credit report forever. This is not true. Bankruptcy can wipe out the majority of your unsecured debts in as little as a few months. And while bankruptcy can certainly negatively impact your credit, the impact is not nearly as bad as thousands of dollars of debt.
Most people choose to file for Chapter 7 bankruptcy. This chapter of bankruptcy works by selling some of your major assets in order to pay off your unsecured debts. In as little as 90 days, you could have the majority of your debts discharged.
The second most common chapter of bankruptcy is Chapter 13 bankruptcy. It works by organizing all of your qualifying debts into a repayment plan. Over the course of 3 to 5 years, you will make minimum monthly payments until all of your debts are paid off.
Tuscaloosa bankruptcy lawyer, Eric Wilson, can help you decide which chapter of bankruptcy is best for you and your financial situation.
Credit Card Refinancing
Credit card refinancing is one of many common credit card debt relief options out there. But it doesn’t work for everybody.
This is how it works: you apply for a 0% interest balance transfer card that has a large credit limit and you move the majority of your credit card debt onto this card. Cards with 0% interest balance transfers can allow people to pay off their credit card debt much faster than a card with a 16% to 20% interest rate.
There is a catch, though. This 0% interest promotional period usually only lasts for 12 months. So if you can’t pay off all or most of your credit card debt within this time frame, you may find yourself back where you started.
Debt consolidation is another common option for paying off credit card debt. If you decide to go with this option, you will have to take out a secured personal loan with a low interest rate. These loans are also called debt consolidation loans. You’ll use this loan to pay off one or more of your credit card balances.
It’s important to remember that you will eventually have to pay off this loan too, one monthly payment at a time. Additionally, it can be difficult to qualify for debt consolidation loans, especially if your credit score is already suffering from too much credit card debt.
Debt Management Plan
A debt management plan is basically a monthly payment schedule that you can set up with a credit counseling agency. You’ll start by meeting with a credit counselor who will analyze your current financial situation and negotiate monthly debt payments with your creditors.
Every time you make a monthly payment to the credit counseling agency, they will distribute that money to your creditors. Similarly to a Chapter 13 bankruptcy petition, debt management plans can help people achieve credit card debt relief within 3 to 5 years.
Debt settlement is a debt relief option that likely has the highest risk of turning out to be a scam or flat out failure. This is how it works: you stop paying your creditors and, instead, start putting money into a bank account that a debt settlement company controls. In the meantime, the debt settlement company will attempt to negotiate with your creditors or your credit card company. The goal is to get them to settle for a lump sum payment that equals less than what you currently owe.
Debt settlement could result in even more stress and financial hardship. Your creditors may harass you, penalize you, sue you, and obtain a judgment against you for not paying off your debts. Additionally, it’s a risky move in general to allow debt settlement companies to have access to large amounts of your money. In the end, the debt settlement attempt may not even work which will leave you in a worse financial position than you were previously.
Some people attempt to settle debts by themselves, but this also carries a high risk of failure. When it comes to paying off credit card debt, it’s crucial to talk to a professional who has your best interests in mind.
Call a Tuscaloosa Bankruptcy Lawyer at Eric Wilson Law Today
If your credit card debt is causing debilitating financial burden, it’s okay to ask for help. Eric Wilson Law LLC is a debt relief agency out of Tuscaloosa, AL. We have been helping our clients get their credit card debt forgiven since 1996. We are the best team to have on your side during a period of financial instability. Call us today at 205-349-1280 to schedule a free consultation.