debt – If i am about 10,000 dollars in debt…? India

Posted by Doug Russel | Debt | Saturday 9 January 2010 2:45 am

If i am about 10,000 dollars in debt…?

is it a good idea to go bankrupt?
most of it is school loans?
or do i pay my debts ASAP?

keeping in mind that i have a 7 month old baby and that my husband isn't working right now so im the only income right now?

Credit Card Debt Consolidation Loans, Are They The Solution To Credit Card Debt?

Credit card consolidation loans are loans used to settle and pay off existing credit card balances but before we go into the ins and outs of this type of loan we will look at the varying methods of credit card debt reduction and elimination.

Credit card debt can only be reduced through acquiring lower rates of interest or negotiating reduced balance. Reducing the interest on your credit cards will allow you to continue making the same payments but more of your payment will go towards paying the principle, therefore reducing your debt that much quicker.

Requesting a settlement for a reduced figure will totally clear your credit card debt. You will be required to pay off in full the settlement figure which is usually substantially less than the debt owed and the remainder will be written off. Although effective in eliminating debt it can damage your credit score.

These are some of the options that can be used to reduce or eliminate your credit card balances:

1. Balance transfers

Many credit card companies offer low interest introductory deals in order to capture new customers, these offers include 0% interest on transfers. These offers last between 6 to 12 months normally and offer the opportunity to payoff sizable amounts from the principle as any payments you make will not go towards paying interest.

This method is especially advantageous if you have several high interest credit cards and is a great way to maintain and actually improve your credit score.

However, if your situation dictates that you need to look at reducing the amount you pay each month rather than work towards eliminating the debt then this method will only work in the short term as these introductory offers only have a short lifespan.

2. Lower your interest rates through negotiation.

Credit card companies are only too aware of many peoples’ plight during these harsh economic times and are much more approachable with regards to negotiating lower interest rates. You can do this yourself although you may have more success using a debt management company, who, for a monthly fee, will negotiate lower rates on your behalf and handle yo
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ur monthly payments.

Your credit score may suffer a little through delayed or reduced payments using this method but this will be a temporary issue and it will not be long before your credit score begins to improve.

As already mentioned, you may want to consider this negotiation yourself, not only will you save money on management fees but you will remain in total control of your finances and more importantly avoid being scammed by the many unscrupulous companies who operate within this field.

3. Debt settlement

Negotiating a settlement with your credit card companies to pay off your card can be the most damaging method to use with regards to your credit score. You can use a debt negotiation company to agree low settlement figures with your creditors and this is very similar to what would happen if you were filing for bankruptcy.

You will still need enough money to pay off the settlement figures, so your debt isn’t so much eliminated as reduced but at a cost to your credit score, and this will hinder you from getting any conventional borrowing for the next 2 to 7 years.

4. Credit Card Debt Consolidation Loans

Finally, we have the option of using a credit card debt consolidation loan. A consolidation loan can be either a secured or unsecured loan and is basically any type of loan that you can use to pay off all existing debt, leaving you with just one debt at a much lower interest rate.

The most widely accepted way of doing this is to apply for a home equity loan. Not only do home equity loans have the lowest interest rates available to the general public they are much easier to gain approval for, even if your credit isn’t great.

In fact this situation will improve massively shortly, as with President Obamas’ new home loan plan, as long as you have twelve months of good payment there is a distinct possibility you could actually refinance your entire debt portfolio for as low as 2% apr!

That would massively reduce the amount of interest you pay each year on every debt you have never mind your credit card debt and as a result will also reduce your monthly payments.

Conclusion:

All of these methods suit certain situations but a credit card debt consolidation loan will be the most effective in reducing your bills and eliminating your debt.

However, using balance transfers initially will help significantly in the short term and will benefit you in allowing you time to find the best possible home equity loan to consolidate your debt with.

By: Daniel Major

Article Directory: http://www.articledashboard.com

For more information about credit card debt consolidation and other methods of credit card debt elimination and debt management visit creditcardconsolidationloanssite.com

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