Every average household in the USA has over $15,000 as credit card debts. If you max out your credit card, you will sink deeper into this debt. Thankfully, there are options to get out of this situation with a credit card debt settlement.
The settlement of credit cards with lenders is an agreement where you pay a lump sum amount for what you owe to the company. You should go for this option when you are close to defaulting your payments or have already done that. Once you want to go with it, here are the best ways to follow.
Make a Proper Payment Strategy
When it comes to tackling the credit card debts, you need a robust strategy to follow. Make timely payments every month, and automate the payments so that you won’t miss the due dates. Remember, every late payment attracts a late fee that may be over $25. Plus, the late payments dent your credit scores and allow the lenders to increase the interest rates.
Also, consider changing your spending patterns. Reduce the utility bills, shop less, and cut your visits to fancy restaurants. Every little sacrifice will help you recover more from the debt.
Opt for Credit Card Debt Consolidation
When you have good credit scores, but credit card debts overwhelm you, it’s time to go for the best measures like debt consolidation. It is a consolidated loan to pay off multiple credit card dues. Here, you can either opt for a zero percent balance transfer or a personal loan.
The former allows you to transfer all your debts to one account to make single payments every month. On the other hand, a personal loan comes at an interest rate lower than your credit card debt.
Don’t forget to compare the interest rates and transfer fee when transferring the balance; else, you may end up paying more interest ultimately. Consult your options with experts to choose the right path.
Based on your specific situations, you may also declare bankruptcy for credit card debt settlement. Firstly, you have to choose the right chapter of bankruptcy from Chapters 7, 11, and 13. Each chapter affects your debt and credit statement.
Choosing this option is also expensive, so you should go for it only when your debts are way too high, and debt consolidation can’t help. Also, remember that it will remain on your credit reports for 7-10 years and make it challenging to apply for any loan in the future.
Consult Credit Counselors
Since the settlement of credit card debts can be overwhelming at times, it makes sense to work with the experts. Credit counselors offer a support system to navigate out of these circumstances with minimum damage to your credit scores.
As the experts of the industry, they can help you to set up a budget and recommend the best debt management program that works for you. The programs recommended by credit counselors usually take 3-5 years to make you debt-free. They will design a working payment plan that aligns with your income and lifestyle. Also, they can help to reduce late fees and collection efforts made by the lenders.
You’ll get access to advanced tools and resources to gain better control over your debt situation when you work with credit counselors.