July 13th, 2009 | 
Author: Summarized below are 5 solutions to credit card and other debt.
- Debt Settlement: With this method, a company helps you to negotiate and reduce your outstanding debt/bills by 40-60%. You’ll have to pay a fixed amount each month to your settlement company. The payments accumulate into lump sum cash after months. The lump sum cash is then paid off to your creditors.
- Debt Consolidation: This is one of the solutions to credit card debt and other bills. Here creditors agree to cut down the interest rates and eliminate or reduce late payment charges. You need to make a single monthly payment to your consolidation company which then distributes the money to your creditors.
- Debt Management: This involves a credit counseling session wherein a credit counselor analyzes your finances and debts. The counselor prepares a budget for you so that you can put in more cash towards debt payment. If you are knee deep in debt, the counselor may suggest a DMP wherein he negotiates with your creditors in order to lower the interest rates and cut down late fees.
- Bankruptcy: Filing bankruptcy is no doubt one of the debt solutions. But it should be considered as your last resort because it harms your credit and brings down your score by 200 points or more. Hence it is better to avoid bankruptcy and look for other debt solutions.
- Ostrich Method: This method of dealing with debt involves taking no steps to pay off debt. It is based on the concept that you ignore debt and it will vanish. However, it is not advisable to ignore debts because your credit will be ruined if you do not repay what you owe. Moreover, your creditors may sue you or the collection agencies may harass you constantly.
Posted in Debt Helpline