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How to resolve credit card debt

Credit cards can help if you are running a little short on cash, or if unexpected expenses arise. If you rely on credit cards too frequently, you may find yourself with an overwhelming amount of debt. Credit card companies often charge a high interest rate as well.

You may feel like you will never get out from under the debt. However, it does not have ruin your financial future. You have options to get your debt under control.

Contact a debt settlement agency

There are companies that specialize in debt settlement. These companies negotiate with credit card companies to have all the money you owe rolled into one amount. This lump amount is usually less than you previously owed. While they negotiate with the credit card companies, the debt settlement company may advise you to quit paying your credit cards. Instead, they could ask you to place your money into an account for use after a settlement is reached.

According to the Federal Trade Commission (FTC), there can be several issues with debt settlement. The companies often ask you to make payments for long periods of time, like 36 months. If you are struggling with debt, it may be hard to make payments for such a long time.

Credit card companies also do not have to settle with the debt agency. If the credit companies do not settle, you could be obligated to continue paying on some cards. Since many companies ask you to stop paying on your cards, late penalties and other charges may continue to accrue. That could lead to more debt.

Call your credit card company

It may be in your best interest to contact your credit card company directly. You should have all your records on hand. Explain your situation carefully and politely. The credit card company may agree to work with you on a modified payment plan. Even if you have not made a payment for some time, there is still a possibility you can reach an agreement about a payment plan.

Reach out to a credit counseling organization

Many credit counseling organizations are non-profit, which means their services often have little or no cost. These organizations assist you with your finances, work on budgets and offer access to other educational services. The counselors have been trained in money management, so they are experts at evaluating messy financial situations. They can help you evaluate your credit card debt.

However, not all services are free, and not all credit counseling organizations are reputable. The U.S. Trustee Program keeps a list of government-approved credit counseling agencies organized by state.

Declare bankruptcy

If all else fails, you might consider declaring bankruptcy. Though declaring bankruptcy carries a stigma, it may sometimes be the wisest move. People looking to rid themselves of credit card debt usually declare Chapter 7 bankruptcy. This usually, but not always, erases all credit card debt. With Chapter 13 bankruptcy, you draft a repayment plan that lasts about three to five years. Chapter 13 bankruptcy may allow you to hold onto assets like your home or automobiles.

Credit card debt can seem overwhelming, but there are resources to help you find a way out.

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