Credit Card Debt Resolution: Serious Strategies To Help You Survive

young male consumer contemplating credit card debt resolution

The Ultimate Guide to Credit Card Debt Resolution

Are you feeling overwhelmed and looking for credit card debt resolution?  Then you have come to the right place is your search for credit card debt solutions.

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Owning a credit card can be both a blessing and a curse. On the one hand, having the ability to make a large purchase and pay it off over time can be convenient. Not to mention that credit cards are lifesavers in an emergency situation or while traveling.

But owning a credit card can also be a little too convenient. Before you know it, those daily lunches out at your favorite coffee shop will end up costing you three times as much when your monthly bill arrives. Especially if your annual percentage rate is higher than average.

This is how riding the slippery slope of credit card debt begins. A missed payment here, overspending there. Before you know it, you’ve dinked up your credit score and harmed your good name.

Before you get yourself into a tailspin, you might want to consider how credit card debt relief can help.

What Qualifies as Credit Card Debt?

Credit card debt is basically accumulated consumer debt. If a cardholder is unable to pay their monthly minimum amount due, then penalties and late fees add up over time, compounding interest. As the card balance grows higher and higher without a regular payment, cardholders sink deeper and deeper into debt.

Reach Out to Your Creditors First

Cardholders looking to begin the process of credit card debt resolution should start by contacting their creditors directly. Explain any factors affecting your inability to pay your monthly bills and ask if there is a payment plan you can arrange.

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If they offer special programs to help with credit card debt, try to make a realistic assessment of your payments instead of over-promising and under-delivering.

Check Your Credit Report

If you’ve been in credit card debt for a while, then you should absolutely check your credit report to see how it’s affecting your credit score. Make sure to access all three reports because they can each have potentially different information. Also, it’s possible there might be some errors, so you’ll need to correct them as soon as you can.

A decent credit score can help you secure an additional credit card with a zero percent APR or help you qualify for a debt consolidation loan.

Five Credit Card Debt Resolution Options to Try

If you’re ready to get serious about managing your credit card debt, we’ve got five options for you to consider. Depending on your equity and credit score, one option may suit you more than the others.

variety of credit cards and cash crumpled up

Option 1: Balance Transfer

If you’re still able to open a new credit card, a balance transfer might be a good option to try. If your credit is still in decent shape, try to get approved for a card with a zero percent annual percentage rate. Be mindful that not every creditor will accept this, though, and your plan might backfire.

Option 2: Debt Consolidation Loan

The goal of a debt consolidation loan is to be able to completely pay off your debt within five years. If this sounds doable, then this might be a good option for you. Aim for no more than a five percent interest rate, otherwise, it’s not really worth it as a debt resolution option.

Two types of credit card consolidation programs are secured and unsecured. A secured loan requires equity like a home or car in exchange for funds. An unsecured loan is harder to qualify for with reduced funds and higher interest rates.

Option 3: Debt Settlement Companies

Deciding to go with a debt settlement company can be beneficial for several reasons. The most important reason of all is helping you negotiate a more realistic amount, or “lump sum” with your creditors to pay down your debt. You’ll be asked to deposit monthly amounts at regular intervals to alleviate the amount you owe.

Over time, as the money accumulates to the amount of your settlement, you’ll be able to pay off your debt with ease. A few things to consider before choosing a debt settlement company:

Watch This Video About Smart Ways To Payoff Your Debt

Time Frame Restrictions

In order to accumulate enough funds for your debt resolution, an extended period of time must occur for the payoff to happen. If you skip a payment or two or just can’t keep up with the monthly deposits, the deal is off. Read between the lines to make sure you are able to complete the arrangement.

Creditor Stress

Since you’re not paying your creditors directly, it will most likely result in your credit score dropping. Late fees, lawsuits, and harassment by phone and mail could end up causing even more stress than before.

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Unsettled Debts

Even though it looks legit, sometimes a debt consolidation company won’t be able to come through on their promise to negotiate and settle with your creditors.

Option 4: Home Equity Loan or Line of Credit

This credit card debt resolution option will only work if you are a homeowner with equity in their home. If you have paid off a substantial amount of your mortgage, then it’s safe to say you can borrow against your home. But if you’re a new homeowner, then you don’t have any equity to pull out of the home.

Option 5: Declaring Bankruptcy

Cardholders with unsecured debts who are having trouble paying off their balances might want to consider filing bankruptcy. Sometimes a fair settlement agreement won’t be reached and bankruptcy might be the best option. Although it will ding your credit score for a substantial amount of time, in the end, it will be worth it.

Make an appointment with a qualified bankruptcy attorney who can help you get back on your feet again. Not only will you be able to start over but you’ll learn new ways to manage your money with the help of a credit counselor. Depending on your financial situation, Chapter 7 or Chapter 13 bankruptcy are both viable options.

Take Back Your Credit – And Your Life

If you’re tired of running from your creditors and are ready to tackle your debts, then we applaud you for taking action. We hope our tips helped you on the road to your credit card debt resolution.

For more great credit knowledge, be sure to explore our blog.

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