The COVID-19 pandemic and high inflation caused many people to take on more debt than they realistically can handle. The result is rising numbers of bankruptcies and large amounts of consumer debt. In many cases, the interest on that debt is overwhelming, which typically leads to bankruptcy filings.
U.S. consumers have an average of $6,329 in credit card debt, totaling a record-high $1.14 trillion in total credit card debt, according to the Federal Reserve Bank of New York. The interest rates on those credit cards often are more than 20 percent and can reach nearly 30 percent. Added fees and especially costly late fees can make the situation even worse for those who can’t pay off their credit card debt. Fortunately, two valid solutions are available in the form of debt consolidation loans and debt settlement services.
Debt Consolidation Loans Stop Credit Card Interest
Many people who are underwater on their credit card debt and other loans qualify for debt consolidation loans that get them out from under the crushing burden of high-interest debt. Those who have suitable incomes and otherwise reasonably good credit likely could qualify for a loan that consolidates their debt and pays off the lenders. The consolidation loan reduces their monthly payments and enables borrowers to live better lives than they would with a high amount of credit card debt.
Personal loans from lenders like Symple Lending remove the crushing financial burden of credit card debt and the high interest rates that go with it. Some credit cards charge interest rates that aren’t allowed in many states due to their usury laws. Such laws were enacted to ban loan sharking, but the rates charged by many credit card companies exceed the amounts allowed by respective state usury laws, which essentially makes some credit card companies the equals of loan sharks.
Debt Relief Helps to Wipe Out Credit Card Debt
If you don’t qualify for a debt consolidation loan, you still might be able to get out from under the crushing weight of credit card debt. A third party, like Freedom Debt Relief, might be able to negotiate a debt settlement with your lenders. A debt settlement occurs when lenders realize there’s a good chance the borrower could file for bankruptcy and have all debts discharged, which gives the lenders nothing.
Instead of taking a total loss, lenders often agree to settle for a lower payoff amount than what is owed and forgive the rest of the debt. A debt-relief settlement stops the interest from growing and combines your debt payments into one over a period of time. The time might be for two or three years and allows you to pay off the debt at a lower amount than you would if you were paying each debt separately with monthly payments. The lender can report that a debt settlement was negotiated, which will affect your credit rating, but not as badly as a default or bankruptcy.
