How to Decide if a Credit Card Debt Relief Program is Needed

When you're up to your ears in credit card debt and are having trouble making payments, a debt relief program may sound tempting. It could give you the relief you need, but beware. Your credit rating may suffer for a while. Here's how to decide if a credit card debt relief program is needed.

Instructions

1. Find out what your credit score is. If it is already lower than 560, debt relief counseling won't hurt and it may help. You may have to pay a small fee online to get your credit score.

2. Consider if paying the minimums on your credit cards leaves you with not enough to pay basic living expenses. No matter how little you eat, you still have to buy groceries, pay the rent or mortgage, keep the utilities on, and transport yourself to work.

3. Look to see if you have been late paying credit card bills or other basic bills on a regular basis. Paying late will cause your interest rates to skyrocket, which will make your monthly minimums go up even more.

4. Call your creditors yourself first to negotiate lower minimums, interest rates and ask for a reduction of the debt. If that is not successful, consider calling for debt relief.

Tips & Warnings

• Letting the telephone ring and not wanting to answer calls, because it is probably a collection agency or creditor calling, is a sign your credit card debt is out of control.

• Consider repayment plans a final effort to pay your bills, but generally, they are better than filing bankruptcy.

• Watch out for scam artists in the credit counseling industry. Deal only with credit counselors approved by the Association of Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.

• Some creditors will demand payment in full of the lesser amount, in exchange for partially writing off some of the debt.

• The Internal Revenue Service may consider amounts written off by credit card companies on your accounts as income, and charge taxes on those amounts.