RSSHow to get rid of credit card debt
June 11th, 2008 by Adam | Filed under Credit Repair, Credit Score, Credit Score Advice, Credit Score Tips, FICO Score, Get out of debt, Improve Credit Score, Pay Your Bills, Personal Finance.|
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Looking for a way to get out of credit card debt and increase your credit score? Check out these tips to help you.
Credit Card Debt Solutions
According to the FTC, there are four basic methods you can utilize with regard to credit card debt solutions: Credit Counseling, Debt Management Programs, Debt Consolidation, or Bankruptcy. While bankruptcy should only be considered as a last choice, let’s review the former programs that may be of significant help to you if you are in debt.
Credit Counseling:
By selecting a reputable credit counseling service and talking with certified counselors, you may have the opportunity to learn how to budget properly and maintain finances in a more productive manner. Counselors can offer the tools and resources you need to pay down your debt and become debt free.
Of course, not all counseling agencies are on the up and up. So it is important to research as many organizations as you can. Call them and make an appointment and be prepared to ask many questions, such as: What type of service do they offer; do they charge fees for their services; are they licensed to operate on your state; are the counselors certified.
Debt Management Program:
This, too, requires a great deal of research to determine if this is the method right for you. This program also encompasses certified credit counselors. In essence, you give them money each month and they pay your bills. Depending upon your financial circumstances, the time it will take to clear up all debt can be up to four years. Again, talk to the selected debt management organization before you sign on the dotted line.
Debt Consolidation:
This is the third alternative, but one that may cost you additional money as well as reduce your credit score. The reason is that if you borrow money to pay off a credit card debt, you still owe the same amount of money but have incurred additional interest and fees. If you decide to take out a second mortgage to pay debts, there is the risk that the points will increase as well.
Although debt consolidation may be considered a likely alternative, you may want to look into other options before you decide.
Perhaps you can take on a second job or ask a family member for a loan. In either case, there are no easy solutions to credit card debt. It will take a great deal of thought, planning and budgeting so that you do not incur any more expenses than need be.
In the interim, you can call credit card companies and ask to have your interest rate lowered, or you can negotiate with them if you are severely in debt to lower your minimum amount due. You can also consider selling items no longer needed or unused on eBay so that whatever profit you make can be applied to existing debt.
The most important way to resolve getting out of debt is to fully accept that you are in debt. Once you make the commitment to pay off this debt using any one of the aforementioned solutions, you are well on your way to a debt-free life.
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