There are several kinds of debt reduction plans available to those who can no longer handle their consumer debts. Whether you wish to restructure some of your money to credit card and loan repayment, personally negotiate with your creditors, hire a firm to help you negotiate with your lenders, or find a court-supervised payment plan through Chapter 13 bankruptcy, there is a debt reduction plan available for you.
Debt Reduction Calculator
A fast and easy option to create a plan is to use a debt reduction calculator (see Resources). These free online tools show how you can save thousands of dollars and years off repayment time by just adding a few dollars to one or more credit card payment(s).
Lender Hardship Program
These are not advertised, but most lenders do have a hardship program which will waive late and over-the-limit fees, reduce interest rates and lower monthly payments. Call or write your lender and ask to be enrolled in this type of program.
Debt Reduction Companies
Debt reduction plans through companies do exist, and are commonly called "credit counseling." They will, for a small fee, renegotiate your payments with your creditors and then distribute money to them each month under your new debt management plan.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy (see Resources) is a court-supervised debt repayment plan that lessens the amount of credit card debt and usually allows you to save your assets, such as a house. These plans normally take 3 to 5 years to complete.
Warning
All plans will have some negative impact on your credit. Whether or not you file Chapter 13 bankruptcy, entering partial or restructured payment plans does stay on your credit file as a negative financial event for 7 years.
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