Definition of Credit Card Relief

When a person takes on unmanageable amounts of debt -- debt that is so large that, were he to attempt to pay it down, he would suffer severe financial consequences -- he may attempt to seek some relief. With debt related to credit cards, this relief can take several forms. A person may seek to settle for paying less than the full amount owed, receive more generous terms on the line of credit, or restructure his payments.

Credit Cards

Credit cards are essentially a tool that grants individuals access to a line of credit with a financial institution. When the person uses the card to make a purchase, he is essentially withdrawing money against this line of credit. He will generally be charged a rate of interest when he does this. If he fails to pay the money back on time, he will be assessed punitive fees, which may lead to the need for debt relief.

Debt Settlement

The simplest form of credit card relief is negotiating with credit card companies to pay less than the full amount on a loan. In some cases, credit card companies will be willing to accept less than full payment on a debt, as they believe it will be more financially worthwhile than to attempt to collect full payment. Partial payment provides significant financial relief to the borrower, but will likely damage the person's credit rating.

Terms

Another form of relief is the renegotiation of terms for the card. Generally, when a person defaults on a card, he is required to pay a higher rate of interest than he previously owed. This interest will apply not just the principal of the loan, but all fees assessed for paying late. A renegotiation of terms may lower the rate of interest applied to the loan or eliminate certain fees for late payment.

Debt Restructuring

When a debt is restructured, it means that the person is still required to pay the same amount of money, but over a different period of time. Some credit card companies are willing to allow borrowers to pay according to alternate payment plans. For example, a person may be allowed to make small installment payments on a loan over a long period of time without accruing additional late or being charged a punitive rate of interest.