Erasing Credit Card Debt

If you have been paying attention you know credit card reform took place more than 9 months ago and the law was finally enacted recently on February 22^nd 2010. With this reality hitting them like a freight train will most likely want to know how to erase credit card debt. This is because consumers will now notice in their new credit card statement a mandate of the credit card reform showing them how long it will actually take to pay off their credit card balance if only making minimum payments on the amount owed on the credit card used. Debtors will quickly get a reality check if they have never received any education on how to properly use credit or more importantly how to get rid of the credit card debt. Debtors will quickly learn you can only get rid of credit card by making larger payments on the loan. As an example, if you are carrying a balance of $3000.00 on a credit card and you are only making the min payments you can expect to be paying on the credit card for approximately 10 years before the card will be paid off.

The following is a more realistic example from an actual statement. The credit limit is $750.00. The amount owed is 657.23. Making a minimum payment of $24.17 at 24% will take 3 years and it will cost a total of $870.29. That is assuming the debtor didn’t make any additional purchases on the card until it was paid off.  However, if the debtor only made the required minimum payment of $15.00 it would take 8 years and the total paid on the account would be $1,218.36 on a credit loan of $750.00.  The only problem is credit card companies are now adding more fees to try to get around some of the rules and regulations imposed on the credit industry for how they conduct their business. This will continue to raise balances even if you are not charging on the credit cards.

If you just got a reality check and are reviewing your credit card statements you definitely want to know how to erase credit card debt. You can either file bankruptcy or try some other debt relief options besides bankruptcy. However, bankruptcy debt settlement usually only occurs during a chapter 13 bankruptcy. If your afraid you can not afford the bankruptcy attorney fees you should reconsider how much you would pay over the life the credit cards and also make a decision on how having too much debt would hurt your credit rating versus waiting 5-7 years before the bankruptcy falls off your credit report. You should really study the bankruptsy process and gather all your bankruptcy facts before you actually make a final decision to pay for some bankruptcy services or settling for someone offering cheap bankruptcy service.

One of the methods people use to try to get out of debt is a type of loan to prevent bankruptcy. Typically, these loans will be consolidated or will come from some type of Home Equity Line of Credit ( HELOC). Unfortunately, since the housing market crashed this option will not be available to several people because equity has disappeared in their home. In other words, the house they bought in 2000 that was building equity has all but disappeared. The debtors that took out HELOC are now faced with debt on a home that has lost all the perceived equity. The old method of borrowing against the home to get rid of the credit card debt will no longer be available for several more years because of what the mortgage company experienced by people filing bankruptcy to remove the house by foreclosure and getting the home off their books.

The stigma of bankruptcy is quickly disappearing and people are no longer feeling bad about letting their home be foreclosed on. Therefore, people are looking at their situation not with just pure emotion but as a business decision. Debtors at the behest of the creditors and mortgage lenders have decided they will not let a upside down house, credit card debt and medical debt take control of their lives. Debtors have now decided to file bankruptcy and concentrate on credit repair after bankruptcy and being eligible to buy a new home using a FHA loan two years out of bankruptcy.