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All across the world, people are having problems finding the money to pay off their credit card debt. The good news is that because so many people are in similar situations, there are a variety of options to help eliminate that debt.
Getting out of credit card debt is entirely possible, regardless of how much you owe. Whether you have multiple credit cards, debt that exceeds $10,000, or have been laid off from your job, you can find ways to eliminate the debt. The roads to do so are not always optimal, but there are ways that will allow you to turn the debt to nothing so that you can spend that money elsewhere.
Interest rates and bank charges can be a person's worst nightmare when owning a credit card. You've already made your purchases and now it's time to pay for it. With a high interest rate, you're paying a considerable amount more than what you originally paid for the item. Plus, as you become unable to pay, you'll face late charges and non-payment fees from the credit card companies as well. Now that simple purchase you made months (or years) ago is now more than you can ever muster to pay.
Anxiety is just one thing that people feel as the debt begins to become a reality. The amount looks startling to the point that other things are suffering financially because you have to make the minimum payments, but cannot. There are things to do that can reduce the debt and ultimately get out of debt once and for all.
Consolidation Loan
A consolidation loan is something offered by many banks and companies to help reduce debt. Rather than paying off multiple cards with different payments at different interest rates, you'll pay one. What happens is that you'll take out a loan for the combined total of all of your debt. You'll pay off all of the individual debts and be left with just the consolidated loan.
A consolidation loan will save you considerable money in fees and interest. Plus, when you are calling a credit card company for a pay-off balance, ask them if there are any incentives to paying off the whole amount. Many companies are so desperate to recoup some of their funds that they'll actually forgive a portion of the balance.
It Doesn't Hurt...
It doesn't hurt to ask credit card companies a few questions. They are all anxious to get their money. Even if it's a portion of it. Anything that will help them get money and you save money, they'll usually consider it. The more you owe and the less you've paid, the more deals there are to be made.
- Will they lower interest rate?
- Will they waive late charges?
- Are they willing to work with you?
Asking all of these questions will usually result in some action on their part. Lowering an interest rate will help so that you are paying more towards the balance instead of more fees. Waiving late fees are easy to do, because technically that's not real money. Plus, it's often hundreds of dollars that you won't have to pay.
Bankruptcy
Many people often think of bankruptcy as the worst case scenario, but it is sometimes the only option. Bankruptcies are considered better than foreclosure and repossession. It shows that you are at least conscious of the problem and trying to do something about it. There are two common types of bankruptcy:
- Chapter 7: total liquidation
- Chapter 11: consolidation and pay back
Talking with a lawyer will help you to decide which move is right for you. You'll take a means test and depending on whether you have the means to pay back the debt or not will determine which chapter to file.
Getting out of debt may take time, but as long as there is light at the end of the tunnel, then you're on the right path. Otherwise, you'll suddenly reach a breaking point. Looking at the different options before that happens means everything to your credit score and your personal well-being.
Final Word
Getting out of debt is entirely possible. Working harder isn't always the answer because of the sheer amount of debt that many people are in. There are many options including consolidation, pay-off deals with the credit card companies and bankruptcy.
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