Managing credit card debt is crucial to ensure you are living a healthy financial life. If you are at a point where your credit card debt has become a burden and you feel that you are in over your head, then it is now time for you to look at your debt relief options. One option is debt settlement. Settling credit card debt may be a viable option, but it has its pros and cons.
How To Get Out Of Credit Card Debt
Talk with your credit card company: This might be your first best step forward. Work towards a modified payment plan with your creditors to settle your credit card debts. Communication goes a long way when you are persistent, polite, and are clear about your needs and your current situation.
Contact a credit counselor: If handling the situation yourself doesn’t go as planned, then reach out to a reputable credit counseling organization. They can advise you on managing your money and debts, help develop a budget, and offer free educational materials and workshops. Such personalized services will give you an idea on how to get out of credit card debt.
Bankruptcy: If you are drowning in the depths of credit card bills, declaring bankruptcy may be your last resort. While this has serious implications on your credit score, in some cases it may make the most sense. However make sure you obtain credit counseling from a government-approved organization within six months before you file for any bankruptcy relief.
Good & Bad of Debt Settlement
While settling credit card debt can really help you. It may have some drawbacks as well.
- You are paying less overall on your debt in a much shorter period of time. Paying the debt off immediately means paying no more interest, and settling means you’re paying even less than you currently owe.
- Debt settlement is less harmful to your credit than bankruptcy if your credit is not already poor.
- Debt settlement may be risky because even after you notify the creditor of your intent to settle, nothing legally stops the creditor from collecting.
- Credibility of the debt settlement company can be a bigger risk. Research! Research! Research! Make sure you don’t fall victim to a fraudulent scam while trying to alleviate your credit problems.
- Settling credit card debt creates income tax liability where the IRS and your state government perceive the debt forgiveness as income to you.
Do your best to make smart financial decisions today, and you won’t have to worry about how to get out of credit card debt in the future.
Want to learn more about debt management options? Contact American Consumer Credit Counseling to speak to a credit counselor today about budgeting and managing your finances. Call 800-769-3571.