Credit Card Debt – How To Avoid Bankruptcy And Eliminate Credit Card Debt

The recession in the economy has caused many debtors to file for bankruptcy. The common citizen is traditionally dependent on loans for everything from homes to consumer goods. Added to this, are the high interest credit card loans which at times become difficult to manage. With the recession in the economy, there is rampant unemployment. Those who are employed are facing huge salary cuts and reduction of perks. Due to this they are unable to manage their loans and are often forced to file for bankruptcy.

Credit card loans are unsecured loans and do not have any collateral attached to them. When a debtor files for bankruptcy, his or her assets are liquidated to pay of the secured loans. In this situation the credit card companies lose all their money because credit card loans are unsecured loans. A large number of debtors filing for bankruptcy may lead to the money lending institutions like credit card companies also to bankruptcy. Large number of money lending institutions filing for bankruptcy on the other hand will lead to the collapse of the nation's economy. In order to prevent such a collapse, the federal government came up with the idea of stimulus money. The government bailed out the financial institutions with financial relief in the form of stimulus money.

The financial institutions like credit card companies in turn passed on this benefit to the debtors. They provided them huge relief in the form of debt settlement programs. They assessed the debtor's actual paying capacity on the basis of his or her income vs. debts. They then negotiated the loan amount with the debtor and settled it for an amount much lower than the original amount payable. They also waived off the interest and the penalties, making the loan even more affordable. The debtors who did not qualify for debt settlement had options for debt consolidation, moratorium, conversion of unsecured loans to secured ones etc. In this way the bad economy in fact became a boon to many debtors with huge credit card debts. They could now negotiate, consolidate and settle their credit card debts.

Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.

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