Are you troubled by your credit card debt? Well, sometimes, people find themselves in a debt pit that keeps getting deeper each day. However, the good news is that companies are willing to reduce your credit card debt. A credit card modification program is where a skilled debt negotiator talks to your creditors on your behalf.
They highlight your current financial state and why it is challenging for you to settle the debt owed. The negotiations aim at arriving at low-interest rates or the amount owed. In the end, you will pay a reduced monthly installment and lower principal.
Most companies do not explicitly disclose who qualifies for a credit card modification. However, a few characteristics stand out when a company analyses your qualifications. They consider your income, payment history, other debts owed, and credit card balance. You do not have to miss your monthly bill payments for you to qualify;as long as you have a good reason, you can qualify for credit card modification.
There are three main options for credit card modifications:
- Debt validation program
- Debt settlement
- Consumer credit counselling
1. Debt settlement
All clients have a right to information that helps to make an informed decision. Before signing a debt settlement agreement, some companies hook you up with a lawyer from your locality to help you understand the contract’s details.
However, you need to demonstrate that you are financially incapable of settling the debt according to the original agreement. Your account should also be under a collection officer.
The credit card modification company negotiates for lower monthly repayments and principal. If the negotiations work well, the IRS could ask you to pay for the debt saved. Fortunately, you can avoid this by filling a #982 tax form. The form will protect you from debt tax.
Sometimes collection officers harass people. However, some laws protect individuals from such harassment. For you to protect yourself from such harassment, hire a lawyer. If the collection agency violates the stipulated laws, your lawyer can sue them. The agency can end up paying fines and penalties, which could help ease your debt burden. Your lawyer could use some of the violations as a basis to negotiate for better terms on the settlement.
2. Consumer counseling program
The credit card debt relief program takes around 4 to 5 years. When you enroll in the program, you still pay the principal amount and minimum monthly payment. However, the debt relief company equips you with tips on how to manage the debts. Since there are numerous ways to pay off the debt, the company explains them to you.
The solution provided depends on your financial goal. Do you want to better your credit score, live debt-free, or pay off your debt as fast as possible?
Unfortunately, the program affects your creditworthiness because of the 3rd party negative notion that consumer credit counselors put on your credit report. The notion is active for seven years, and it portrays you as unfit for lending since you were incapable of managing your debt at some point.
The counselors walk with you until you clear your debt. The method equips you with invaluable tips on financial and debt management.
3. Debt validation program
The program challenges the work ethics and professionalism of debt collection agencies. Debt validation focuses on the failures of the agency to uphold the laws governing debt collection. The program seeks to confirm that the collection agencies have the correct and accurate information on your loan. Failure to abide byjust one of the lawsis enough to declare the debt uncollectable.
Credit card modification companies do not modify the terms of payments but rather the debt status. However, there needs to be an irregularity for the debt to be declared uncollectable.
If a credit card debt becomes uncollectable, you are free from it and have no obligation to pay even a penny. Debt validation repairs your credit score. On the flipside, there are some risks associated with debt validation. Your credit card modification company will explain to you.
Watch out for hidden traps when you need help
Beware of scam credit card modification companies. The companies have the following characteristics:
- They guarantee that an unsecured debt can go away
- Asks for payments before settling the debt
- It tells you to put on hold all lawsuits and debt collection calls
- They advise you to stop talking to your creditors without explaining the consequence
Anyone qualified for card modification. The truth is that debt relief companies qualify people based on their current situation. Any debt that gets out of your control is not worth threatening your peace of mind. If there are proven and helpful strategies to settle the debt, consider it. Credit card modification is one of the most reliable solutions for credit card debts.