Credit Card Remediation Programs

Credit card remediation, or debt relief programs, enable Americans with serious financial troubles to get out of debt faster, according to the Federal Trade Commission. But before entering any private credit card remediation program or enrolling for federal bankruptcy protection, the consumer should thoroughly study his options and also accept that debt relief may not necessarily help his credit rating.

Self-Help

If you have regular income and can implement better financial habits, you may be able to get yourself out of serious credit card debt. Some creditors will negotiate the terms of your repayment plan directly with you, especially if you are a reliable customer. For example, if you typically pay your bill on time but recently experienced a financial hardship, the creditor may take your payment history into account and work with you through your issue. Even if you do not wish to use a credit counselor to remediate your debts, a budgeting session with one may help you find ways to save money and accelerate your debt repayment.

Debt Management Plans

Some credit counseling agencies offer debt management plans, but use caution before enrolling in one. A credit counselor remediates your debt repayment terms with your credit card companies. For this service, you will likely pay an enrollment fee as well as a monthly service fee. Thoroughly investigate any credit counseling agency before using its debt management plans. The Federal Trade Commission and the Office of the Attorney General in states such as Florida handle many consumer complaints about agencies mishandling payments.

Chapter 7 Bankruptcy

If you're in serious credit card debt and have few resources to repay it, you may need to file for debt liquidation under Chapter 7 bankruptcy. While Chapter 7 will erase most of your debts including honestly-incurred credit card bills, the drawback is that the filing damages your credit rating for 10 years and you may lose some of your assets. Generally, you must earn less than your state's annual median income level to file Chapter 7. At the time of publication, the yearly median income level for a family of four in Puerto Rico is $28,382, while the qualifying income level for a Connecticut family of four is $103,314, according to the U.S. Trustee Program.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy enables court officials to remediate most of your debts, including credit card bills. Unless you lied to get credit or charged cards right before filing bankruptcy, a judge will partially or fully absolve you of pre-existing credit card debts. Chapter 13 creates a partial debt repayment plan that takes three to five years to complete. But during this time, you cannot legally get any new credit, which includes refinancing your mortgage without a bankruptcy judge's consent.