Debt Reduction Advice | Debt Reduction Advice

Credit card debt has a stranglehold on many Americans.  In fact, the Federal Reserve Board estimates that Americans held over $950 billion dollars in credit card debt in 2008.  It is also estimated that, on average, individuals hold just over $4200 in debt while families are under an $8100 debt load. Unfortunately, that number is predicted to rise with Americans using their credit cards to stretch their monthly budgets to cover the rising costs of food, gas, and general living expenses.  For those who are unemployed or underemployed, credit cards can be a necessary survival tool.  This dependency on debt comes with a high cost as some credit card companies raise interest rates without notice.  Americans can find themselves under a constant amount of financial stress and are ready to break the grip that credit cards hold over their lives.   There are ways to settle credit card debt on your own, but you have to do your homework.  These simple tips can help get you there:

Contact your credit card company. 

If you find yourself getting further and further behind on your bills, call your lender to negotiate a lower interest rate or set up a more manageable payment schedule.  Be persistent.  Many companies would rather work with you at this level than to have to settle your debt all together.

Use a third party debt settlement/counseling company.

Credit settlement service companies promise to cut your debt sometimes by as much as half.  They seem appealing at first until you pay attention to the fine print and see the high fees they charge for their services.  It’s best to find a non-profit credit counseling service, but do some investigating; many of these are not what they seem either.  Check out your local Better Business Bureau for legitimate credit counseling services in your area.

Settle your debt on your own.

This is not an easy option and requires patience, a thick skin, and knowledge of your rights as a consumer, but it can be done.  It is not for those who simply do not want to pay their bills any longer.  You will have to show proof and documentation as to why you can no longer pay.  It is a lengthy process (anywhere from 3-9 months) which in the end may only reduce your debt by a small percentage.  Keep in mind, this option can hurt your FICO score which is used to determine your future credit worthiness and it can take years to recover it. This can be worth the effort however, if you can get a large part of your debt forgiven. If you have the time and inclination to take this on your own, there are several “Do It Yourself” credit settlement kits on the market that can aid you in this process.

Using these tips and investing your own time and energy can help you reduce if not eliminate your credit card debt.  Once you are the path to financial freedom it will reduce much of the stress in your life.