Whether it be from personal, leisure, or emergency expenses, you have built up credit debt you can no longer handle.
Your credit cards are near the credit limit and after you make your payment, you spend the available balance as soon as you can. Credit cards can be addicting, and if you don’t catch yourself early, you can amass a credit debt your income can’t handle, and when this happens it’s time to seek help. Luckily there are options out there which can help you minimize your payments and lower your overall credit card balance, and by doing so you’ll be on your way to erasing your credit debt.
The most common forms of help with your credit card debt are credit counseling, debt consolidation loans, debt relief and bankruptcy. Choosing the correct form of help is crucial, so read the brief explanation of each credit debt option and see what fits your situation best:
- Credit Counseling: When you have a lot of credit debt with over three or four credit cards, credit counseling is a wise move to make. Your credit counseling company will develop a debt management program, OR DMP, which will help your credit debt in a number of ways. First, it will bunch together all of your different credit card balances to create one final balance to pay off. They will also negotiate with your creditors to a lower your individual balances. Next, a DMP will stop any future charges or interest on your credit debt. And finally, a DMP will bring all your delinquent accounts back to current status. Credit counseling is an effective way to take back control of your credit card debt, but if you need a loan to cover everything there is an option.
- Debt consolidation loans: A debt consolidation loan is basically one large loan to use to pay off all of your credit debt. Just like credit counseling, it’ll gather all of your individual balances and create one final balance you will pay them. Credit cards typically have high interest rates, and a debt consolidation loan will freeze the interest. Depending on the size of the loan, you’ll need collateral, and the standard form is a second mortgage on your home. However, if you haven’t made a payment on a credit card for a few months, than you may have entered a red zone in your credit debt and have only a couple options left.
- Debt settlement: Debt settlement is a severe form of dealing with credit card debt. Even though you’ll be getting rid of your credit debt at a discounted rate, it will remain on your credit score for years to come. Debt settlement is basically a last attempt by your creditor to receive at least a portion of the credit card debt that you have defaulted on. If you have reached a point where you can’t afford any of form of reconciling your credit debt, there is only one way to handle your credit debt.
- Bankruptcy: If you are going to file bankruptcy, always make sure this is your last resort. Whether you file Chapter 7 or Chapter 13, which differ in their approach, your credit will be tarnished. Credit card debt doesn’t usually end up in bankruptcy, but it isn’t out of the question and if you have high credit debt, make sure you take a more intelligent approach to erasing it than you did amassing it.
