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Ending Credit Card Debt … Choosing The Right Option

It will come as no surprise to you, that all around the world consumers are collapsing under the pressure of credit card debt. This makes people desperate and in turn they may become easy victims of fraudulent credit card settlement companies. Don’t learn the hard way that settlement companies aren’t magical and can’t make credit card debt vanish overnight. But you can learn to shed credit card debt for good.

 Credit card debt and the various ways of tackling it

Cut Credit card debtYes, credit card debt may be your worst nightmare coming true but there are things you can do about it. Of course, if you haven’t got a steady income, then things are bleak. But if you have an income there is hope to get a rein on your credit card debt before it’s too late.

  1. Do it Yourself: If you have just a few thousand dollars in debt and about 1 or 2 cards, then take up the task of getting rid of credit card debt on yourself. Give your credit card issuers a call and inquire about repayment plans explaining your current financial hardships. The company might work with you by reducing your credit limits or perhaps the rate of interest involved. Experts generally say that most people are too scared to call their creditors, but they’re the first ones you should consult. At the same time it’s also important to acquaint yourself with the pros and cons of each option before actually picking one.
  2. Credit Counseling: This is a rather important aspect which most tend to ignore, but it can actually do wonders for your credit card debt problem. When your debt is something that’s soon spinning out of control and it’s spread over multiple cards, then consulting a credit counselor is imperative. He or she is better equipped to assess your financial situation and help you determine the best course of action so that you can ultimately get rid of your credit card debt. It could even be something as simple as setting up a repayment plan. Just be careful of counselors that charge exorbitant fees. There are many services that are free.
  3. Debt consolidation: When you go for credit counseling, your counselor can tell you whether a repayment plan would work or whether your situation calls for credit card debt consolidation. In case of consolidation, the debt consolidation agency would negotiate with your creditors on your behalf for a lower rate of interest and single monthly payments on your cards. This method generally ensures that there aren’t any late fees or fines involved. You’ve got to make a single payment to your debt consolidation agency and then they’d disburse the money to your creditors. These plans are generally of 3 to 5 years’ duration and after that all your debt should be paid off. Just remember that debt consolidation companies usually take a chunk of the payment for themselves so it will take longer to pay off your bills than if you did the same thing yourself.
  4. Debt settlement: If none of these strategies work and your credit card debt takes on mammoth proportions, then debt settlement may be the only way out of your financial mess. Debt settlement should be one of the last options when it comes to getting rid of credit card debt. This method generally involves forgiving a sizable portion of your debt, and may involve bankruptcy. If you are able to negotiate some debt forgiveness,  you need to be aware of the fact that any debt above 600 dollars when forgiven is considered taxable income, unless you declare bankruptcy.

Image courtesy of Luigi Diamanti/ FreeDigitalPhotos.net

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