5 Simple Tips to Wipe Out Credit Card Debt Without Filing for Bankruptcy

In this age of economic meltdown and post recession hangover, credit card debt is consistently rising in US. As per the report issued by Federal Reserve the total amount of U.S. revolving debt (98 percent of which is made up of credit card debt) is $793.1 billion, as of May 2011. If you are crumbling under insoluble credit card debts and bankrupt seem to be the only way out, you have enough reasons to worry about. Bankruptcy has its own pitfalls; it usually has devastating effects on the consumer’s credit and it makes it impossible for the consumers to obtain future credits. However, if you are looking for a suitable alternative to bankruptcy, you can settle credit card debt and eliminate a considerable portion of your credit card debt. Besides this, you can take a number of prudent steps, which will not only eliminate your credit card debt over time, but also improve your credit rating in the long run.

If your credit card accounts are in default, your first and foremost duty is to contact your credit card lenders and confide your current financial hardship in them. You can request the lenders to set up an affordable payment arrangement to repay your missed payments.

• If your creditors have already sold the accounts to collections, your next lookout point should be handling collection issues quite seriously. You can always ask your lender for the agency’s contact information. Once you find out their address, arrange for an affordable repayment plan with the collection agency.

• However, before you plunge into the nitty-gritty of a repayment plan, you must get a clear picture of your current financial situation. Create a list of your credit cards based on their interest rates, current balance and due dates. Review the current statements of your credit card to determine, which credit cards need to be paid first. Make sure your credit cards with the highest interest rate are paid first. Once you pay the highest interest card, move on to the credit card, with the next highest rate and so on. In fact you can try using the debt avalanche or Dave Ramsey’ debt snow ball method as well.

• Be prudent and check out all balance transfer offers available. Transferring your balance to a 0% introductory rate credit card will help you to pay down your debt pretty fast. However, remember, with balance transfer offers, you are charged a lower rate of interest only for a set term. As during this time, the majority of your payment is forwarded towards your principal, it helps you to clear your credit card debt faster.

• Be creative and explore different ways to free up extra cash in order to pay down your debt sooner than before. Re-evaluating your daily expenses can help you to find out different ways to save more. For example, you can embrace frugal living for the time being, prefer to cook and avoid eating out and can use carpooling, which can save significant fuel expenses.

Last but not the least, if you still can not manage your credit card debts; seek expert help and guidance of a credit counseling agency. Visit a credit counselor or a non profit consumer group; you can rely on to determine the best way to pay your bills. They can not only assist you to pay your current bills, but also will help you to develop a budget which will keep you away from future debt.

Guest post by Sidney Terrell