How to Get Help to Eliminate Credit Card Debt
Large credit card balances can be overwhelming. Whether you're struggling with overspending or job loss, there are options for eliminating credit card debt. Using strategies such as realistic budgeting, credit counseling and debt management programs can help. Paying off debt won't happen overnight, but overtime it's realistic to eliminate credit card debt.
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Instructions
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Develop a budget. According to the Federal Trade Commission (FTC), the first step in taking control of your credit card debt is creating a realistic budget. List all of your income. Then, list all of you debt obligations. Determine if any of the debt obligations could be reduced or eliminated (premium cable channels, high transportation costs, and expensive Internet provider services). Minimize those expenses to free up extra money toward paying off debt.
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Contact your creditors. High interest rates drive down the amount of money paid on principal each month. Talk with your credit card company about a lower interest rate. Also, consider balance transfer offers. These offers allow borrowers to consolidate debt at a low-interest rate for a specific amount of time. During this time, the majority of your payments will be allocated toward principal.
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Handle accounts in default. If you have accounts in default status, contact the lender right away to make payment arrangements. Based on your budget, tell the lender what you can afford.
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Check into credit counseling. If you're having challenges creating a realistic budget, check out credit counseling programs. These programs are offered through universities, credit unions and housing authorities. Reputable credit counseling will offer you advice on paying off credit cards, provide free education and workshops to help you manage money.
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Talk with debt management programs (DMP). According to the FTC, if it seems impossible to pay credit card debt, talk with a debt management company. With a DMP, a credit counselor reviews your information and gives you advice on paying off credit cards. You agree on a plan to repay debts and deposit money into a DMP account monthly. The organization makes payments to the creditor on your behalf. With these plans, it can take 48 months or longer to repay debt obligations. Contact your local housing authority to find reputable DMP programs in your area.
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Tips & Warnings
According to the FTC, debt collectors aren't allowed to call you after 9 p.m. or before 8 a.m. They're also not allowed to contact you at work. If you encounter a debt collector who isn't following these rules, contact the FTC to report him.
Don't deal with DMP plans with high up-front fees, recommends the FTC. The DMP should thoroughly review your credit file and charge modest fees. A DMP should also never pressure you into making "voluntary contributions" to the organization.
References
- Photo Credit credit card and hand image by Warren Millar from Fotolia.com
