Facing the Reality of Credit Card Debt

Credit Cards—everyone has one and everyone has found themselves wishing they didn’t. Then comes credit card debt and while no one wants it; most everyone has it. It can seem like there is no way out and most people have a hard time facing the reality of it.

However, facing reality is always better than burying your head in the sand. Dealing with your debt head on will not only improve your sanity but also get you back on track. Here are some steps to help wipe out your credit card debt.

1. Facing reality
Yes, it will be painful, but you have to just grin and bear it. Recognizing the severity of the debt is essentially the first step.

1. Add up the balances on all your credit cards and other loans—figure out the total of what you owe. Note the interest rate you are paying.
2. Make a list of all your monthly essentials: rent/mortgage, utilities: heat and power, loans, auto payments, health insurance, taxes, cell phone bills, food… everything you cannot live without.
3. Calculate your total income and your monthly essentials. The end number will be your discretionary spending.
4. For at least one maybe two months, write down every cent you spend. It will give you an idea of how quickly things add up. 

2. Do you really need that
You might be surprised how quickly life’s little luxuries such as eating out and getting coffee every morning may add up. Instead of spending $3-$5 on coffee each morning put aside that money and use the extra change to pay down your debt.

3. Contact your credit card company
For some people, keeping up with their monthly payment is impossible. Calling your credit card company might be the only choice. It is important to know that if you decide to call your credit card company you MUST remain calm. Explain your financial situation and give legitimate reasons why you are a responsible person who is determined to pay off your debt.

4. Arrange your credit card debt from highest to lowest
Keep up with minimum payments on all your cards, but pay whatever extra cash you can afford on the card with the highest rate. Once that card is fully paid off you can move to the next highest rate and so on. This is a sure fire way to make progress. As this strategy continues to work, you will be able to pay off bigger portions of your debt.

5. Be cautious
Be cautious about debt settlement companies that “guarantee”. No company can guarantee a debt settlement with a credit card company. In fact there is no reliable shortcut in getting rid of your credit card debt. For the majority, it is a long process, so stay focused.

If you can follow these steps and remain determined through hard times you stand a chance against credit card debt. When that debt-free day comes, you will be glad you faced the reality.

Some Important Rules of Thumb when Going Through Debt Resolution

Debt resolution can mean a handful of things and can be achieved in many different ways. However, regardless of whether you are filing for bankruptcy or working toward loan modifications there are still some very important things to keep in mind in order to make the process go as smooth as possible.

The following is list of important rules you should follow when going through the debt relief process:

1. Keep good records and ask for everything in writing.
Written correspondence holds much more weight than phone conversations so you may want to avoid collection calls altogether by asking that creditors send you what they need through the mail. Then, start a file of your correspondence with the debt collection agency as these records may be required during court proceedings.

2. Send all documents through registered mail.
Sending registered mail may cost more, but it can be very valuable in the long run. Registered mail documents that the receiver actually got whatever was sent to them by delivering the sender a signed receipt. That receipt ensures that no one can claim that whatever you sent got “lost in the mail.”

3. Keep your cool and don’t rush the process.
Debt resolution can be frustrating at times, but try not to be tempted to show a sense of urgency to resolve your debt. Keeping a level head and maintaining your patience can prove to creditors that you are confident enough to wait for their best possible offer.

4. Ask creditors to remove negative listings from your report.
After going through debt resolution, if you succeed in paying your debts in full there is nothing to stop creditors from removing negative listings from your credit report. Be sure to ask them to remove the listings and send you their agreements to do so in writing.

If you have further questions on the best ways to resolve your debt, visit our website at: www.creditadvocatelawfirm.com.