Beat Credit Card Debt – How to Avoid Bankruptcy

Credit Card Debt

When it comes to solving your credit card debt problems, an unsecured loan, while a different financial product than a traditional credit card, can still provide a viable solution for beating credit card debt: Paying off the lowest balance is not enough. If only the interest rate on the credit card is paid, the debt amount will take years to repay even with the lowest interest rate.

This is where a low interest loan that has a long grace period in which to pay can be very helpful. While interest rates are still high, the payment time frame will allow you to pay your balance in a timely fashion. Even if interest rates have dropped drastically, the grace period will allow you to make large payments in order to slowly catch up and get out of debt.

Credit cards are not the only financial tool that works effectively as a debt solution, however. Interest rates on unsecured loans are also quite high, and as they do not require collateral for a loan, they can also be used to leverage your debt. You can also take advantage of other loan options such as the use of your home as collateral, to refinance your existing loans at lower rates.

While a zero interest credit cards are certainly convenient, they do have a few disadvantages as well. When you do not have any collateral to put up against a debt, you have little to no protection against creditors who file lawsuits against you. If you can afford to pay back your debt, these suits rarely go ahead anyway.

Credit cards also do not provide any protection when it comes to your credit rating. It is important to maintain your credit score to avoid falling behind in debt. In a world where your score can determine what type of employment opportunities you will qualify for or whether you are even eligible for housing, credit rating is everything.

Credit cards also offer no form of repayment plan in the event that you have financial difficulties in the future. These debts are not usually affordable by a single person; especially in today’s economic climate. It takes two to three years for most credit cards to completely payoff even one single debt.

As a result, the only other option is for someone who cannot afford to make their debt completely payable to go back to the lenders and request that the cards are canceled. If you are able to prove that you were unable to repay your debt and can prove that you have a legitimate income, you will be offered a chance to purchase another card.

Unfortunately, this does not work for many people because it is unlikely that you can find another credit line if your credit is damaged in this manner. Once your credit has been damaged, you will not be able to obtain another card and will have to start from square one.

The good news is that many people who have suffered damage to their credit score can still beat credit card debt through bankruptcy. Bankruptcy is not without its critics, but it is one of the few options that can be effective for people who can’t find a way to repay their debts.

Bankruptcy is the method in which the majority of Americans file for bankruptcy. This is because it offers a one time chance to pay off your debts. The amount owed is then wiped out and replaced with a fresh start.

However, the bankruptcy option should not be considered your only solution when you want to beat credit card debt. Even though you do not have to pay your credit cards off entirely with a bankruptcy filing, it may be necessary to negotiate with your creditors for reduced amounts. This is because once you file for bankruptcy, you will not have access to the same options as you would have before.

Your options are much more limited when filing for bankruptcy, especially when it comes to consolidating all of your debt into one account. In addition to negotiating with your creditors, you will have to obtain a credit counseling service to help you achieve a sound budget and get back on track financially.