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Options for settling credit card debt

Many debt settlement companies offer assistance to Kentucky residents with paying off their credit card debt. One major drawback of these services can be the fees that these companies charge. Federal law requires these companies to disclose all of their prices and policies to the consumer up front and any consequences that the consumer could suffer as a result of their actions.

Another option is for the debtor to contact the credit card company directly to negotiate payment terms or settlement offers. It is important to be courteous and polite with the credit card company's representatives throughout the process. A credit counselor can help consumers manage their money through budget planning. Many offer free workshops and educational materials, and most of these services are non-profit organizations. A government-approved organization could be a great idea, so checking the U.S. Trustee Program's list of these organizations could help.

The final option for many consumers is bankruptcy. Most consumers avoid bankruptcy as long as they can because of the severe impact it has on their credit. Chapter 7 bankruptcy could even result in the loss of the debtor's house and other personal property, though debtors may qualify for Chapter 13 which allows repayment over a period of three to five years. Filing for bankruptcy can help debtors get a fresh start.

With credit card and other unsecured debt, consumers have a few options for getting rid of it. An attorney may be able to advise the debtor on which course of action is right for his or her current situation, but the ultimate decision on how to handle it is up to the debtor. If the person decides to file for bankruptcy, the law requires credit counseling from an approved organization within 180 days before filing.

Source: Federal Trade Commission, "Settling Credit Card Debt", October 16, 2014

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