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 options that you can look into first.
First of all, if you are still using your credit cards – STOP. You are just digging the hole deer. You have 4 basic options for credit card debt relief. Here is a quick overview of how they work:
1. 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 you are not able to do all of these things, you may want to consider credit counseling.
2. Credit counseling- This is a form of debt consolidation without a loan. Your credit counselor works with your lenders to reduce your interest rates and eliminate your fees. You will still need to be able to make about a 2 percent payment each month. 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.
3. 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. Although, many people that use debt negotiation already have negative credit. You can negotiate directly with your lenders, but you should be prepared to pay the negotiated balances in full. There are companies that will negotiate all of your unsecured outstanding balances. If you are contemplating bankruptcy, debt settlement is a good alternative.
4. Bankruptcy-This is not the free ride that it used to be. In most cases, it will be a reorganization of your current unsecured 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.