Credit card loans are unsecured loans and hence have a very high rate of interest.
This is the reason that once you accumulate a large amount in credit card debts, they keep multiplying and after a point of time it becomes impossible to repay them.
This is when in desperation many debtors file for bankruptcy.
But a bankruptcy stays on a person's credit record for 10 years and on the public record for ever.
It becomes impossible for an individual to get any credit or loans in the market.
Getting utilities and insurance also becomes difficult and expensive.
A debtor's bankruptcy is harmful to the card companies also because if a debtor files for bankruptcy the card company loses all the money loaned to the debtor.
In the current market scenario many debtors are in financially difficult situations.
If all of them file for bankruptcy it will have a serious impact on the financial health of card companies.
This can lead to a collapse of a large number of card companies and other financial institutions dealing in unsecured loans.
This in turn can have an adverse impact on other industries and the nation's economy.
In order to prevent this, the government has come up with government grants for debtors and stimulus money for the creditors.
The card companies have found relief from the threat of immediate financial ruin and hence they have decided to pass on this benefit to the debtors in the form of debt settlement programs.
Through debt settlement programs the debtors can negotiate and eliminate at least 50% of their debt.
This settled amount can then be paid as a lump sum or in monthly installments.
If you are in debt you can also take the benefit of government grants.
However you need to remember that the government will pay off only a percentage of your credit card debts.
IF you are in debt you should avoid spending too much on cards.
Moreover any kind of settlement or government grant can adversely affect your credit scores.
Hence you should resort to these measures only if you really cannot repay your debts.