How to Settle Credit Card Debt

“Can I get out of credit card debt?” That’s the question you ask when you find it hard to make credit card bills repayment and you start to get notices from creditors. Did you blame on your credit card companies? Did you admit that you were not the only one facing the debt load?

Don’t blame on yourself or the situation. The real cause of your financial mess can be you or other things beyond your control. Your debt is not a curse. It might be a blessing or, at least, it’s just a sign for you to be responsible with your own life. You just have to believe that you can reduce and eliminate your debts.

Underlying Causes of Credit Card Debt

Credit card debt is a major cause of bankruptcies each year because consumers are unaware of its financial risks or don’t have enough “safety net.”  One or more of the following causes of debts might mirror your financial situation:

  • Excessive medical expenses: If one of your family members suffers serious illness and your health insurance cannot cover the medical bills then your credit cards are probably the only source of funds to pay off the difference.
  • Gambling: Gambling is fun but if it becomes addictive it’ll be hard to stop. And borrowing money from credit cards for gambling will surely lead you to a financial disaster.
  • Reduced or lost of income: A divorce, death of spouse or unemployment may cause a serious debts. Credit cards are the easiest way to fill in the huge gap between income and expenses.
  • Poor money management: What percentage of your income have you saved each month? If you don’t have a budget chances are you cannot set aside some money for saving and emergency needs.

Ways to Clear Credit Card Debt

Depending on your level of debt you can take one or more of the following actions to reduce or eliminate your debts:

  • Making a budget: Making a budget is what you should do first if you don’t want to fall into a deeper debt load. Assess how much do you get from your income or other means and your expenditures. Your goal is to make sure that you can meet all the basic necessities: food, housing, clothes, health-related costs, among others.
  • Contacting your creditors: You may not include this step in your plan but running away from your creditors is not the right answer. If you are having trouble paying off your debts, address this by talking with creditors. State to them the reason it has become hard for you to pay these debts, and negotiate your debt to reduce your monthly payments.
  • Dealing with debt collection agencies: If you cannot stop your creditors to turn over your debts to debt collectors be ready to protect your rights. The Fair Debt Collection Practices Act clearly states that those collecting debts may not bug you, give false assertions, or do practices that are not fair when they are collecting money from you.
  • Hiring a credit counselor: You could also consider getting the aid of credit counseling services that will help you in your debt problems. If you find good credit card debt management companies, creditors may approve your proposal and accept your modified payment plan.
  • Filing for bankruptcy: Even though personal bankruptcy is a faster way of addressing your debt, only use it as the last resort to fix your credit card debt. A bankruptcy stays on your financial information record for the next ten years. Getting more credit, buying a house, sometimes even getting a job might be hard for you.

So, there are many ways to settle credit cards debt. But the key is to start spending less than you make. Even though eliminating your debt will take your will-power and a great deal of time if you keep yourself strong you will find yourself out of debt before you know it.

How to Settle Credit Card Debt was last modified: April 10th, 2014 by Paul Sarwana