Unpaid Credit Card Debt-What Can I Do?

In Credit Repair of CreditGuru (April 26, 2009 7:06 pm)

Unpaid credit card debt seems to be an unfortunate sign of our times, but there are things you can do to help turn your financial situation around. It will take work and for some, depending on their situation bankruptcy may be the only answer. But there are several debt relief options that you can look into first.

Put your credit cards on ice. You are just digging the hole deeper. You have 4 basic options for credit card debt relief. Here is a quick overview of how they work:

  1. Pay them off yourself- This takes a lot of discipline. You must stop using your credit cards. It will be in your best interest to come up with extra money by reducing expenses and increasing your income. You will need to be able to make more than the minimum payment on your credit card accounts. If this is not an option, you may want to consider debt counseling.
  2. Credit counseling- This is a form of debt consolidation without a loan. Your credit counselor works with your lenders to reduce your interest rates and eliminate your fees. You will still need to be able to make about a 2 percent payment each month. Your payment will be made each month to your debt counseling organization and the will disburse it to your lenders. Your credit card accounts will be closed, but your credit will most likely remain in tact as long as you fulfill the terms of your debt management agreement.
  3. Debt settlement-This option is a reduction on your credit card balances through negotiation with the lender. This will most likely get your out of the fastest, but the price to be paid will be what it will do to your credit. Although, many people that use debt negotiation already have negative credit. You can negotiate directly with your lenders, but you should be prepared to pay the negotiated balances in full. There are companies that will negotiate all of your unsecured outstanding balances. If you are contemplating bankruptcy, debt settlement is a good alternative.
  4. Bankruptcy-This is not the free ride that it used to be. In most cases, it will be a reorganization of your current unsecured debts. This should be used only as a last resort. It will stay on your credit record for 7-10 years. Bankruptcy has to be done through the courts.

Unpaid credit card debt can be the source of a lot of stress and conflict, but it will not go away without you taking debt elimination steps. The sooner you take those steps, the sooner you can be on your way to debt freedom.

 

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