Debt Management : How to Pay Off Credit Card Debt
How do debt management companies help?
I'm currently in a situation where I've collected more debt than I can manage and the interest payments are staggering.
Besides telling me how I can better spend my money, I'm wondering how a debt management company could help me?
I own a house. Would they somehow tie the debt into my mortgage payments?
Basically – what can they do for me that the bank can't?
Boss – why not spam less serious questions?
Watch the video related to debt management
There are a couple of ways to pay off credit card debt, including getting a consolidation loan, making more than the minimum payment and starting by paying off the cards with the higher interest rate. Consolidate all bills into one at a lower interest rate withhelp from a business analyst in this free video on financial planning and debt management. Expert: Terry Kuykendall Bio: Terry Kuykendall is currently a budget analyst for the military in Washington. She is an accountant who has worked …
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This entry was posted on Wednesday, November 4th, 2009 at 4:53 am and is filed under Debt Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
9 Responses to “Debt Management : How to Pay Off Credit Card Debt”
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Credit counseling and debt management courses are really only of use if you've got real income. You don't. So you're going to need to try something else.
Dropping out of school to work full-time is not a realistic option. If you really do have $15,000-$20,000 in credit card debt then you're in pretty big trouble. At an average credit card interest rate, even just paying the minimum would take about $300 a month for 20 years and cost north of $70,000 dollars by the time you've paid it all off. As any job you're likely to be able to get without a college degree isn't going to pay much more than $20,000 a year, you'd wind up having to spend $3600 a year just on debt management, and you'd have to do that for 20 years. You can't afford that. No one can.
Bankruptcy might be an option, but not a particularly attractive one should you want to keep going to school. I assume that you've got student loans and will need more to stay in school. Lenders will be extremely reluctant to loan money to anyone who as declared bankruptcy, especially someone as young as you are. So while that could conceivably eliminate a lot of your debt, it would almost certainly permenantly damage your credit.
It's also not a given that you could even declare bankruptcty. The rules for doing so were recently tightened by Congress. I don't know the exact details of your situation or if you'd be affected, but it's harder than it used to be.
As unpleasant as it sounds, I believe that declaring fraudulant use of your cards may be your best and, in fact, only option. You yourself did not run up the charges on the cards. Your family used the cards without your knowledge, knowing they were screwing you over, and are now unwilling to help you get out of the mess they put you in. Any loyalty to the person who did this to you is entirely misplaced. While it's true that you don't generally want to level fraud charges against your family, it's also true that you don't generally want to defraud your family.
You need to get in touch with your credit card companies and tell them that your cards have been used fraudulently. If you can tell them who did it, they'll go after the fraudster themselves, more than likely. You may need to get in touch with a lawyer to prove that it really wasn't you who ran up these debts. Either way, this sounds like the only way that you're going to ever be able to get out of this mess.
The Credit Counseling company will probably get you a better price in the long run because they will negotiate a lower rate than you can. But, you are being charged a very large amount of compounded interest on every dollar that you owe them for every Month that the amount is owed. Let Mom and Dad help IF the interest rate and terms are better than you are currently paying the credit card companies. And, if you can afford to pay all of your bills iccluding that payment. Remember that the credit counselor is making money on you, they will not always counsel you to your advantage.
This is not a good deal. Reducing your payments will not save you anymore at all, infact, often times you will end up paying more in the long run.
The only way a debt consolidation loan is a good idea is if you get a lower interest rate, but continue to make high monthly payments, so more money is going towards principal rather tha towards interest. This is the only way to pay off more of your debts…applying more money towards the principal.
If you don't go the route of the consolication loan, make extra payments on the smallest debt only…make as big of a paymnet as possible on this one, while maintaining the other minumum payments. When that debt is paid off, move that entire payment amount onto the next smallest debt. COntinue doing this until it's gone. Again, the key is to make sure the monthly payments stay high, you're just transfering the payments from one to another as they get paid off. This is the "Debt snowball" strategy that most debt management companies recommend and is also promoted by people like DAve Ramsey, and Richard Kiyosaki.
There are a couple of options I would suggest. Don't use a debt solutions company. They usually just have some $7 dollar employee telling you what to do while he reads the scripted answers to you. First fiand out what your current credit score is and then put that to work. For example you can get a higher limit card and balance transfer all your debt with a $0 balance transfer fee and then usually 12 months free interest. Upon this method continue paying the highest amount you can monthly. After time it will be paid off quickly. Your motivation and dedication to your spending habits will be hard to change. Although determination will get you through it. 2nd, choice I suggest. Let me know your credit situation and I will help you evaluate what bank and card you will get the best rate from. I have done this now for 5 years and completed cleared my bad debt. Just by rearranging my debt I was able to have plenty of money left over to invest. If you need anything else. Let me know. CLINT
I say keep paying on it but ,My husband is an accountant and he said your best bet is the debt relief management . It frees up your payments more and puts you in a better position. I hope this helped. I personally been through a lot of financial heart ache my self. When I married my husband he helped me straighten up my finances.(working my way out of it slowly). Take care . Contact me if you have any more questions.
Uh, I'm going to school full time, and working full time, and have no problem with my classes. If you apply yourself this shouldn't be a problem.
I'm looking at it this way: you're 26 years old, you have a house (how much was your down payment? I hope you don't have an ARM), you have a job (albeit not a great one from your post), and you have a 401K. The market isn't great right now and selling your house might hurt you more in the long run, especially because it's not unheard of for houses to sit on the market for 6 months or more right now. A second job is a necessity as is cutting out anything and everything that is not a necessity, cable, date nights, drinking nights, extra clothing, etc etc. It's not unheard of for a 26 year old (or a 30 year old) to not have a 401K at this moment, or to have a scrawny one. While not the wisest move, if it's the difference between bankruptcy and not, I would say to go for it, but then to make sure you make wise decisions in the future. Bankruptcy will affect you more in 30 years than money in your 401K will.
You mention savings, how much do you have? Would it help with your credit card debt?
Well my husband and I had this same problem from debts he incurred before we were married. I would recommend finding a good not for profit credit counseling agency. They helped up pay off a 13000 dollar debt by arranging to stop late fees and lower interest rates. You do have to agree to incurr no new credit during this time. In the long run with the right agency it can be a great program. You can look online for one in your area.
Debt Settlement, also called debt negotiation is an arrangement between a debtor and a creditor to repay a debt generally for a for a lowered payoff amount. When a debtor is not able to pay the debt any more for any reasons, debt settlement is the only option that remains.
Generally, only unsecured debts, like those accrued with credit cards , can be negotiated for settlement. This is because of the fact that there is no security attached with unsecured debts. Hence, the lender can't repossess anything. On the other hand secured debts, like home loans, mortgages, car loans etc. have a collateral attached to them and can be repossessed by the lender if a default on debt occurs. So, there is no debt settlement or negotiation with secured debts. Read more about it at: http://www.credit-card-gallery.com/article/216,The_secret_of_successful_debt_settlement