Solutions to Credit Card Debt

photo credit: SqueakyMarmot

If you are worried about your level of credit card debt then there are a number of solutions open to you. Exactly which solution you choose to reduce your credit card debt will depend on the size of the debt, and your income compared with your total outgoings. There are a number of helpful things that would be common to most situations:

If your credit score is still in good shape then look around for better rates of interest for your credit card debt. Zero percent balance transfers are not as common as they once were but they are still available. Use the reduced/free interest period to reduce your debt as much as possible.

If you are having trouble making enough money to pay your credit cards minimum payments then you have a problem. If you have missed any payments then you probably won’t be able to look around for a better deal, but it might be worth double checking. Try reducing your other regular monthly payments (e.g. insurance, utility bills etc.) by using a money comparison site. If you can reduce your monthly outgoings to the point where you can pay you minimum amount on your credit cards then you will eventually pay them off. If you can manage even a small amount more than the minimum payment it will reduce the length of time to pay off your debts significantly. It is important to point out that you should not be going short of food, clothes or basic things to pay off your debts. If this is the case then you should really (for the health of you and your family) be considering some for of debt solution that will bring your monthly payments down.

If you cannot adjust your budget to the point where you have enough money to pay your credit card bills each month then you will have to consider more drastic measures.

1. You could consolidate your debt into either a secured or unsecured loan. It would probably be best to try and avoid a secured loan if you can, since problems with paying this debt could result in you losing your home. Be very wary about any form of consolidation. You have to be absolutely certain that you will not build up credit card debt in the future. Also, if you have problems with your unsecured debt in the future a consolidation loan will increase the amount that you owe your creditors.

2. You could try an negotiate reduced payments with your creditors. Either yourself or via a debt management company or charity. This may be a good solution if you have a relatively small debt.

3. If your debts are larger you may be suitable for an individual voluntary arrangement (IVA) which will write-off a proportion of your debts leaving you to pay only what you can afford. This needs to be negotiated for you by an specialist company. Beware any that try and charge you large up-front fees.

4. You could investigate declaring yourself bankrupt. This is debt solution that will have the most negative effect on your credit score and future ability to get credit. However it is the quickest way to become debt free and is very suitable for people that don’t own their own home.

Tags: Bankruptcy, credit card debt, Debt Advice, debt assistance, Debt Problems, Debt Solutions