If you are facing credit card debt, it can seem impossible to get out of. Continuing to add to your balance and missing payments will only dig you deeper and deeper into debt. The very first moment that you think you may have trouble making payments is the time to start planning to reduce your debt. There are several processes for reducing your credit card debt. The most successful method is simply planning out a strict budget, and sticking with it. If you need help, credit counseling agencies are available, as well as debt management programs, credit card debt consolidation, and as a last resort, bankruptcy.
The best way to get out of credit card debt is to modify your personal budget. This debt relief method will not cost you anything, and can be done on your own. The first step to creating a new budgeting plan is to determine all of your sources of income. Next, you will need to calculate all of your fixed expenses. These are expenses that must be paid, and are the same from month to month, such as mortgage or rent payments, car payments, and insurance payments. You also need to estimate all of your variable expenses, such as food, clothing, and other expenditures. The goal of designing a new personal budget is to ensure that you are able to allot a certain amount of money to pay your bills, and save a specific part of your income to pay off debt. If you are unable to save any extra income to reduce your debt, you will need to either reduce the amount of spending on variable costs, or find an additional source of income such as a second job.
If you feel you are unable to devise an acceptable personal budget, there is still help. Credit counseling may be able to assist you in getting on a new financial track. Credit counseling is available in person as well as over the internet. Credit counselors are specially trained to assess your specific financial situation, and recommend a budgeting system that can start you on your way to getting out of debt. You should exercise care and do some background research before you decide to use the services of a credit counseling agency. These services are not always guaranteed reputable, and sometimes may not be free, even if the agency claims to be a non-profit organization.
Credit counselors may recommend a debt management program for your situation. A debt management program will make payments to your creditors, while you make affordable payments to the debt management agency. These programs may take up to four years to complete. You should also be very careful before entering into an agreement for a debt management program. First of all, do your research on the company; take note of any formal complaints that have been filed. You should also make sure that there are no large fees required up front, or any strongly urged voluntary contributions. It is also necessary that you continue to make payments to your creditors until you are positive that they have accepted the debt management program, and that your debt managers have begun making your payments.
Credit card debt consolidation is a means to refinance your credit card debt with a lower interest rate. In some cases, you may be able to get a loan or another credit card with a rate that is lower than the interest rate on your current credit cards. You may look into getting a second mortgage or a home equity line of credit with a more affordable interest rate to pay off your credit card debt. However, these loans are secured by your home, and there is a risk of losing it if you default on the loan.
As a last resort, bankruptcy can dissolve your debt. If you file for bankruptcy, you can receive a court-issued discharge, which releases you from liability to your debts. This should only be done as a last resort, and if all other debt relief attempts have failed, due to the consequences. Filing for bankruptcy can stay on your record for ten years, which will make it very difficult to ever get a loan, credit card, home, or apartment. There are two common types of bankruptcy, Chapter 7, which is known as straight bankruptcy, and Chapter 13, which the government is encouraging more consumers to utilize. Under Chapter 7, basically all of your assets will be liquidated. Under Chapter 13, you may be able to keep your home and car if you can come up with an accepted plan that will use your future income to repay a portion of your debts.
Of course the best way to get out of credit card debt is not to get into it in the first place, but the truth is that most consumers will face debt troubles sometime in their lives. The smaller the debt, the quicker and easier it will be to resolve, so be sure to start changing your spending habits. If necessary, begin looking into some of the debt reduction processes and doing some more research at the first signs that you may have financial trouble. Turn to Secure Loan Consolidation and secure your financial future.