Unpaid credit card debt seems to be an unfortunate sign of our times, but there are things you can do to help turn your financial situation around. It will take work and for some, depending on their situation bankruptcy may be the only answer. But there are several debt relief options that you can look into first.
STOP using your credit cards. You are just digging the hole deeper. You have 4 basic options for credit card debt relief. Here is a quick overview of how they work:
- Pay them off yourself- This takes a lot of discipline. You must stop using your credit cards. You will have to reduce your household expenses and if possible increase your income. You are also going to have to be able to pay more than total minimum payments on your accounts. If this is not possible, you may want to think about credit counseling.
- Credit counseling- This is a form of debt consolidation without a loan. The credit couseling service will coordinate with your creditors to reduce your interest rates and eliminate your fees. Each month, you still be required to make a 2 percent payment. You will make 1 payment each month to your credit counseling agency and they will pay your credit card companies. Your credit card accounts will be closed, but your credit will most likely remain in tact as long as you fulfill the terms of your debt management agreement.
- Debt settlement-This option is a reduction on your credit card balances through negotiation with the lender. You can get out of debt more quickly with this method than any other, but it will most likely damage you credit. Many individuals that select debt reduction have already had issues with their credit. You can negotiate directly with your lenders, but you should be prepared to pay the negotiated balances in full. There are professionals that help get your credit card balances reduced. if you are thinking about bankruptcy, debt settlement can be another method.
- Bankruptcy-This is not the free ride that it used to be. This usually involves a reorganization of your current debts. This should be used only as a last resort. It will stay on your credit record for 7-10 years. Bankruptcy has to be done through the courts.
Unpaid credit card debt can be the source of a lot of stress and conflict, but it will not go away without you taking debt elimination steps. The sooner you take those steps, the sooner you can be on your way to debt freedom.