In previous posts, I’ve stressed again and again to always pay off your credit card debt in full and on time and to stay away from bad debt, credit card debt being one of them.
But what happens when paying off credit card debt becomes a task so insurmountable? What are a debtor’s options? One of those options is debt consolidation. Debt consolidation, also referred to as consolidation loan, simply means replacing multiple loans with a single loan.
Sounds smart, huh?
But beware, debt consolidation MAY NOT be for everyone, as this, in essence, means getting a loan to pay off other loans and normally requires collateral, too. These types of loans usually carry lower interest rates and paid over the long term, taking you longer to become debt-free.
But then again, if you know what you’re doing and have thought this over a good number of times in your head and are seriously considering debt consolidation, here’s a guest blog you might want to peruse.
Simple Step-By-Step Guide On What To Do When You Can’t Afford To Make Your Credit Card Payments
It’s true that every consumer is well aware of the fact that they should make credit card payments at the end of every month. But how many of them listen to this piece of advice and pay their credit card debt right on time? Well, not a lot, I guess.
Image courtesy of Pixomar / FreeDigitalPhotos.net
In fact, after the economic downturn and unfortunate recession, the amount of outstanding credit card debt and the number of delinquent credit cards are soaring high.
As per the reports issued by the Federal government, the average credit card debt per household is $15,799, while nearly 609.8 million credit cards are held by U.S. consumers.
If you are presently struggling with your overwhelming credit card debt and looking for a long-term solution, the following points can help you out.
However, if your debt issues are spiraling out of control, opt for credit card debt consolidation programs immediately, which can help you lighten your debt loads to some extent.
Confide in your lender
If you are missing your credit card payments due to an urgent financial crisis like a sudden job loss or steep medical bill, call your creditors and confide your current financial impediment in them.
The sooner, the better as the sooner you will contact your creditors, they will be more willing to form a repayment plan for you. Don’t feel hesitant. Remember the card companies are always willing to negotiate as they want to retrieve the debt amount as much as possible before it’s too late.
In order to make your monthly payments convenient and affordable, you can ask your lenders to lower the interest rate and possibly waive your fees or to make some other adjustments to your accounts.
Attempt to work out a payment plan with your creditors like debt consolidation and pay your multiple debts through a single gateway at a lower monthly payment.
Don’t forget to keep a record of the conversations you have with the creditors, including the name and title of the person you spoke with, date, time and results.
Debt forgiveness
If you’re striving to get your debt forgiven, then you must know the deal is no cakewalk. You can qualify for a debt forgiveness plan only if you fulfill certain criteria like your account is delinquent for at least 90 days.
However, remember, if you settle your debt and eliminate a considerable portion of your debt, it can have some adverse impact on your credit score, as you are closing some of your accounts due to settlement.
In fact, if your forgiven debt exceeds $600, you have to pay income taxes on that amount as well.
Set your priorities
If you are struggling to make your monthly bills, prioritize your debt first. Once you pay off your essential bills, start paying down your credit card balances.
Start with the credit card which has the highest interest rate and make more than the minimum payment there, while maintaining minimum payment on your other credit cards.
Last but not the least, keep in mind as credit card debt is an unsecured debt, there is nothing that credit card companies can take away from you, if you go delinquent.
Work hard to pay off your credit card debt, and stop using your credit cards unless and until you pay off your current balances fully.
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We should know how to control the use of our credit cards. I have learned my lesson. 🙂
Good thing you already did, Zen! Sometimes, people still don’t realize that a credit card doesn’t mean free money.