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Reducing credit card debt without losing one’s house

Many New Jersey residents wonder how they may be able to obtain relief from overwhelming amounts of debt, and some may even think it necessary that they sell their homes to pay other, unsecured debts. For persons with a steady income, however, there may be ways to reduce or eliminate credit card debt without losing their homes.

A beneficial first step for many people is to speak to a debt counselor. An unbiased third party can review a homeowner’s overall financial picture to ensure that he or she fully understands the amount owed, how far behind the payments are or whether foreclosure is imminent. With all the facts, consumers can better determine whether they would benefit more from selling their home, renting it out or continuing to live in it. A person who is behind on mortgage payments and unable to catch up may be required to sell the property in order to avoid foreclosure.

Once a decision is made for the home, one can decide how to handle credit card debt. A credit counselor can often establish a consolidated debt plan in which monthly payments are made to eliminate his or her total debt within only a few years. Another option is to attempt to settle the debts with the credit card companies directly.

For other people, bankruptcy is the best way to eliminate credit card debt. A Chapter 7 bankruptcy may allow consumers to discharge most unsecured debts while keeping their homes. A bankruptcy attorney may be able negotiate debt settlements or advise them regarding whether or not to file for bankruptcy. When bankruptcy is the best choice, an attorney can file the paperwork and help make the process flow more smoothly.

Source: Fox Business, “How to Make $40,000 Credit Card Debt Disappear,” March 25, 2013

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