by Hayley Jones
Do you feel that you have too many credit card bills accompanied by high outstanding balances that seem to be impossible to pay off? You are probably thinking seriously about zapping your credit card bills but not sure about what options are available to you.
You basically have four options for doing this and they are doing it yourself, using a credit counseling service, debt management, and debt settlement. They are all alternatives to declaring personal bankruptcywhich should only be your last resort. Let’s look at each of your options for zapping your credit card bills a little further.
Do It Yourself:
Everyone’s debt situation is not the same. In some cases, a person’s debt may be so high that some other party needs to get involved in order to provide solutions. These parties could be a debt management, credit counseling, or debt settlement service. However, you should always consider rectifying your debt situation on your own before pulling in other help. Solving your own debt situation is more fulfilling, the least costly, and the most reliable compared to outside intervention by other services.
Solving your own debt problem involves cutting down your expenses, budgeting your money, making accelerated payments on your debt, and increasing your income. It usually is not a quick solution but it is the most effective and there is a greater potential for you to protect your good credit history.
Use Credit Counseling:
Credit counseling services are designed to help you get started reaching debt freedom on your own. Bona fide credit counseling businesses will have counselors who can look at your credit card bills and advise you on things such as creating a budget, managing your money & debt consolidation so that you can pay down your debt. Many of them advertise that their services of free but some may ask for contributions. When you are trying to get out of debt, be careful of using services that may end up costing you more in the long run.
Use Debt Management:
A debt management program is one that offers to get the interest rate lowered on your outstanding debt if you enroll in one of its plans. The plan usually involves making a fixed monthly payment over a period of four to five years with the end result that you are debt free. The debt management company negotiates with your creditors to get your interest rate lowered. It does have a negative effect on your credit score but if you are in serious trouble your credit score will suffer anyhow.
Use Debt Settlement:
Debt settlement is different from debt management in that a company providing this service negotiates with your creditors in order to reach an agreement to pay what you owe back at a “settled” amount. Your creditors will get less than the original value of the debt and it will reflect negatively on your credit record but it is still a way to zap your credit card bills. Debt settlement is different from debt management in that the settled amount due will be required at a lump sum payment. The service that you use will probably tell you to stop making payments directly to your creditors and pay the service instead. Once enough has been collected to satisfy the lump sum amount, the creditor is paid off.
In theory, debt settlement plans sound good but the industry has its share of scammers and there are no guarantees that a particular creditor will not sue or that you will not get harassment by debt collectors. In other words, it is extremely important to do a thorough check of any company that you intend to use.
In summary, there are several tools available to you for getting out of or reducing your debt instead of filing for personal bankruptcy. If you are sinking fast in a sea of high credit card balances, start checking out some of these alternatives and make the right decision as to the route you will take.