May

15

Credit Card Debt Relief

Tagged Under : Debt Relief, Relief

A debt relief, or debt settlement, company has the responsibility of working with your creditors to try to get them to lower your interest rate, lower your payments, or both. Sometimes these companies will negotiate so that you don’t have to pay the total amount you owe, but instead you pay only a portion of the debt. The representative works as a mediator so that you do not have to deal with creditors yourself. This can be appealing if you find the task of dealing directly with creditors to be frustrating and intimidating.


Pros and Cons

The most beneficial part of working with a debt settlement company for credit card debt relief is that you can, indeed, find yourself paying less than you would have to if you simply worked through the debt on your own. There can be some drawbacks to this, though. It will likely have a detrimental effect on your credit report since your creditors can note that they were not paid in full. The debt settlement company can charge you a fee upfront, which can create additional financial hardship. You should only work with a company like this as a last resort. If you can still make the payments yourself, even if you can only make minimum payments, this is likely to be preferable as long as you set a plan in motion to get the debt paid down.


Working Through Debt Yourself

If you find yourself buried in bills, the day to start turning your financial life around is today. First of all, collect all of your notices and find out exactly how much you owe. Then you can begin to make a plan for paying everything off over time.

  1. Write down each debt’s minimum payment, interest rate and total amount owed. This may seem like an intimidating process, especially if you have lost control over how much money you truly owe, but it is an important first step.
  2. Call each creditor to see if you can have your interest rate reduced or have the payments reduced to a more affordable amount. Be persistent yet polite, and if the customer service representative you speak to is unwilling to help you should ask to speak to a supervisor.
  3. Once you’ve taken care of that, noting that some creditors will say yes while others will say no, it’s time to see how much money you have available to put toward your bills each month. If you have enough to pay the minimum on each, plus a little bit extra, you can try the snowball method. This is when you put the minimum on every bill except for the one with the highest interest rate. You put the minimum plus the extra on this one. As that high interest bill gets paid off, you can then devote extra funds to the bill with the next highest rate of interest. Continue down the line.
  4. If you can’t afford to make the minimum payments on all of your bills, you may want to look into a low rate consolidation loan. That way you can have fewer monthly payments, and you may be able to make it work. Good places to try are community banks and credit unions, which are sometimes more willing to work with people that are struggling with their credit. Just be sure to make all of your payments on time.

It is completely possible to get out of credit card debt on your own as long as you create a reasonable plan and stick to it until the debt is paid off.

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