If you find yourself overwhelmed and stressed out by credit card debt, know that you’re not alone. The average consumer owes at least $5,000 in credit card debt in the United States. The total amount of debt Americans owes collectively totals $807 billion. While no one wants to be in credit card debt, it’s nice to know that you’re in good company.
Despite so many people being in credit card debt, the overall goal should be to live a debt-free life. But how do you get out of the current chokehold your debt seems to have on you? Fear not – there are lots of relief options available for people whose situation feels hopeless. Keep reading on for the top credit card debt relief options to help you become debt-free as soon as possible.
If you have more than one debt with different creditors, debt consolidation may be right for you. Debt consolidation involves combining all of your debts into one, making a single payment each month with a set interest rate. When you consolidate your debt, you get rid of the other high-interest rates you had previously and instead only have one to consider when making your single monthly payment.
Debt consolidation can be attractive to people dealing with different debts for many reasons. One reason is that having a single payment date each month helps you stay on track of your finances. You won’t have to worry about keeping track of various dates and payments and can always ensure you know when each payment is due.
It’s also an attractive option for people with multiple high-interest debts that are losing money each month by barely being able to afford payments and getting hit hard by high-interest fees. This helps you create a baseline for dealing with your overall debt.
How to Get a Consolidation Loan
In order to get a debt consolidation loan, you need to apply for a loan for the total amount you owe in your existing debt. If you are approved for the loan, you then use the funds to pay off your other outstanding debts. While debt consolidation can be useful for overdue credit card bills, it can also help you with debts concerning your home, car, and overdraft and even store credit cards.
It’s important to only go down the path of debt consolidation if you’re in a position to make monthly payments for the amount of time required. There can be serious consequences if you miss monthly payments. It can damage your credit score and your belongings could be repossessed if you don’t pay up. Alternatively, your credit score can go up if you make monthly payments on time.
Debt settlement is another type of debt relief program that helps people get out of debt. Put simply, debt settlement is the process of paying less debt than you owe in a settlement process. The idea is that you offer your creditors a lump-sum payment in exchange for part of your debt to be forgiven.
While this may be music to your ears, it’s important to understand that this can be difficult to achieve. In order to settle with a collector or creditor, you need to put your negotiating hat on. The negotiating process can be lengthy and tiresome, so it’s a good idea to hire expert help if you’re feeling lost and need assistance.
How Debt Settlement Works
While debt settlement companies cannot guarantee that they can get your debt settled, they have extensive experience in working with creditors in lowering the overall amount that you owe. Sometimes it pays to have someone on the side. It also helps take the burden off of your shoulders knowing that you have someone on your team trying to help you become debt-free.
The average debt settlement offer ranges from 10%-50% of what you owe. This can be a huge help to people who feel overwhelmed by the high level of debt that they have and lets them work toward a manageable resolution.
While creditors are not obliged to accept a settlement (even if you’re dealing with a debt settlement company), they often end up going for it to close your account. While their ultimate goal is to get you to pay your balance off in full, the quicker they can get your account settled, the better. It may end up being a winning strategy for your situation. FreedomDebtRelief can help you pursue a debt settlement program if that’s the path you’re interested in.
Credit counseling is a less extreme approach to take if you’re looking to become debt-free. Various companies offer credit counseling. Some nonprofit institutions even offer expert advice for a reduced or no fee.
If you decide to go down the path of credit counseling, you will work with a dedicated credit counselor who will review your current financial situation. They will assess the total amount of debt you’re dealing with, your job, etc. and help you formulate a plan to get you back on your feet. This can include creating a budget and finding smart ways to save money.
If you’re one of those people who can’t bear to check your banking account, now’s the time to look. Separate your spending into relevant categories such as groceries, bills, entertainment, etc. You may be shocked at what you find out. Do you need 10 streaming subscriptions to watch your favorite shows? Maybe you can cut back on how many times you eat out a week. There’s always a way to save money and credit counselors can help you figure this out.
If you’re completely unable to pay your creditors, you may consider filing for bankruptcy. While this is a serious action to take in one’s life, it can help people drowning in debt wipe their slate clean and start over again. Bankruptcy involves selling off or liquidating your assets to pay your debts and stays on your credit report for 10 years. This should be considered a last resort, as there are lots of other debt-relief options available that won’t have as serious consequences as bankruptcy.
Become Debt Free Today
While the idea of becoming debt-free may seem like a fantasy, it can be made a possibility with the right strategy. There are lots of credit card debt relief options out there for people struggling with their debt such as debt settlement, debt consolidation or bankruptcy. Work with a trusted professional and see if any of these debt relief options is right for you.