Credit card debt can pile up quickly and that can be stressful and confusing. However, there are 5 solutions for credit card debt that can help such as credit counseling. Credit counseling is preferred by many because it is an easy and effective solution to credit card debt.
Credit counseling is often a free service that is provided by nonprofit agencies to help those who are seeking answers in overcoming debt.
During credit counseling, a counselor will carefully review your expenses, debts and income.
Your counselor will create a comprehensive and detailed budget and action plan.
This kind of counseling is recommended for those who are unsure of how to proceed with credit card debt.
Debt management is another solution for credit card debt. This kind of service is provided by credit counseling agencies to help those who have a large amount of credit card debt.
This credit card solution is effective for some because a credit counselor will work directly with your creditor(s); which takes the pressure off from you.
This method reduces interest rates, fees and payments so that your debt can be paid off in a timely manner.
Most importantly, with debt management there are no tax implications.
Debt settlement is a different process because it is an agreement between a borrower and a creditor where the borrower pays a certain percentage of the total debt owed.
During a debt settlement, payments are temporarily put on hold.
In the meantime, the debt settlement agency negotiates the payments.
Payments can impact your credit score in a negative way.
Bankruptcy is something most of us want to avoid; however, in this case it can be a positive solution to credit card debt. To be clear, bankruptcy is a legal process that can help you discharge or repay debts under the guidance and protection of the federal bankruptcy court.
There are two types of bankruptcy; Chapter 7, known as liquidation and Chapter 13, which reorganizes your debts.
Keep in mind, even though bankruptcy can eliminate certain kinds of debts such as credit card debts, it cannot discharge other debts such as spousal support or a student loan.
Most importantly, bankruptcy can stay on your credit report for seven years and prevent you from taking out other lines of credit or other loans.
One other solution for credit card debt is debt consolidation. Keep in mind, debt consolidation is a solution you can initiate on your own.
Debt consolidation is when you use one larger loan or line of credit to pay off smaller debts.
For example, you could borrow $5,000 from your local bank and pay off several credit cards with balances adding up to $4,550.
This debt solution works well for most and has the advantage of you initiating the process.
To conclude, credit card debt can pile up quickly and put a halt to spending. In addition, credit card debt can stigmatize your credit rating and cause additional hardships for you and your family. However, by putting into place one or more of the above credit card solutions, you can get rid of your debt and enjoy your life once again. Don’t let credit card debt ruin your life. Take action now and enjoy being debt free and do not forget to apply for ni card