The Solution to your Credit Card Debt Problems

Relatives, friends and even articles that offer unwanted moral advice about credit card debts are equally useless and numerous when one desperately needs a practical solution to the problem. Often credit card debt arises because of unforeseen circumstances. Events like job loss or death of the earning member are not intentional. Instead of panicking, the best way to deal with the situation is to actively take steps that reduce the debt. If this course is not pursued, debts will keep mounting and eventually one will end up having no money for anything because most of one’s income will be spent to clear the debts.

While it goes without saying that expenditure has to be curtailed and lifestyles adjusted to suit altered financial circumstances, it is important to know how fix the problem effectively with minimal expense. There are two solutions to consider debt consolidation and debt settlement. This article discusses the pros and cons of these two methods.

The Consolidation Method

In this method the borrower takes a loan to cover all the credit card debts that he may have incurred. Even if the borrower has incurred more than one debt all these are covered under one loan. Though the hassle of repaying many loans with different interest rates is reduced, this comes at a high price: the borrower is still stuck in the debt trap.

The Settlement Method

The debts can be finally cleared at one go if one negotiates with the creditor and requests for a reduction. Although it sounds unlikely, credit card companies are willing to settle debts because they are afraid that they will not get anything if the borrower files for bankruptcy. However, they tend to browbeat individual borrowers to settle for unfavorable terms. The surest way to get the best deal while settling credit card debts is to appoint an established company to negotiate with the creditors. Moreover, these companies will have the know-how to deal with complicated financial issues and suggest the best solution.

How to Avoid Getting Duped While Clearing a Debt

One must be careful while choosing the right debt negotiation company because there are many sham companies that are set up to dupe unwitting debtors. Desperate to clear their debts, they fall prey to the enticing claims these companies offer. Companies that charge fees to fix credit reports or suggest that creation of a new identity will be a panacea to all credit problems are bad news and should be avoided.

Thus we see that credit card debt can be cleared even if they are very high if one knows what to do and when.