Is this you? Are you crying for help with credit card debt? If so, you’re only one of many. There was a study released recently showing that the average American household has $7,149 in credit card debt and the average indebted household debt is $15,325. Of course, these are just averages, meaning that many families are carrying a lot more debt than $7,149. I saw one story recently about a couple who managed to escape from $52,000 in credit card debt.
It doesn’t matter how you got there
How you got so far into credit card debt doesn’t matter. You might be a shopaholic and just didn’t use your cards responsibly. Or, like many Americans, you may have lost your job or become underemployed and have used your cards to just get by. The important thing isn’t how you got there. The important thing is what you can do about that credit card debt.
There is help available
The silver lining to your cloud of debt is that there are a number of things you could do to pay off your credit card debts.
The first of these is to use the “snowball” strategy. To do this, you will need to make a list of all your credit card debts, with their interest rates and the total amounts owed. Then rank them in order of the card with the highest interest rate first down to the one that has the lowest interest rate. Next, you will need to get to work paying off the card that has the highest interest rate. You do this by doubling (or better) your monthly payments so that part of them will go against your balance owed and not just on interest. Once you get that card paid off, you can use the money you’ve freed up to start paying off the card with the second highest interest rate and so on – until you’ve paid off all your credit card debts.
A debt consolidation loan
Another solution is to consolidate your credit card debts with a debt consolidation loan. This will get all those debt collectors off your back. Plus, you’ll have just one payment a month, which should be much less than the total of your current monthly payments.
Of course, you will have to be able to borrow enough to pay off all of your credit cards. If you owe, say, $20,000 you will have to be able to borrow that much, which might not be easy. In fact, about the only way that you might be able to borrow this much money is if you have enough equity in your house to get a second mortgage or home owner’s equity line of credit for the $20,000. And this type of loan does come with certain disadvantages. For one thing, you would be putting your house at risk because if you were to default on the loan, your lender can foreclose on your house. And second, it would probably take you 7 to 10 years to pay it off.
A debt management plan
You could also get help with your credit card debts through a debt management plan. This is usually done in combination with a consumer credit counseling agency. If you go this route, you will be assigned a debt counselor who will go over all of your finances and help you develop an affordable payment plan. Your counselor will contact all of your credit card providers and negotiate with them to lower your interest rates and to approve your payment plan. If all your lenders approve your plan, you would then send one check a month to the credit counseling agency, which then pays your creditors. The downsides of a debt management plan is that you would have to give up all of your credit cards and it would likely take you five to seven years to get out of debt. Plus, it might be easy for you to slip even further into debt.
A third way to handle credit card debts you can’t pay is to declare bankruptcy. If you choose a chapter 7 bankruptcy, which is the most common, you will have all of your credit card debts discharged, as well as some of your other unsecured debts such as personal loans and medical bills. However, a chapter 7 bankruptcy cannot discharge student loan debts, past due alimony or child support payments or taxes owed.
Debt consolidation done right
The fourth and we think best help for credit card debts is to let our debt consolidation providers go to work for you. They offer a simple 100% Satisfaction Guarantee. If they cannot help you become debt free in a reasonable amount of time or if you are unsatisfied with their recommended debt relief programs, you can cancel and there will be no fees or penalties. In other words, you have nothing to lose by working with our debt consolidation providers – except all of those credit card debts.