Where to Get Help For Credit Card Debt

I can think of plenty of places that are willing to help you out with credit card debt … with creating it, that is! Unfortunately there is a marked lack of help from the other side of the fence. That is either because people don’t care, or they’re making money off your credit card debt. However, there are some shining lights of goodness, hope and purity in our community, to whom you can turn to help you get out of credit card debt. We look at some of the best options.

There is Help Available For Credit Card Debt

Debt Consolidation

Any debt consolidator worth their salt does not charge you a fee. Competition for the loan dollar is so hot that credit providers will give loan brokers a commission to help them find eligible customers – so you shouldn’t have to pay them a cent.

Loan brokers are quite easy to find, even in country areas, and most offer debt consolidation services. They go way beyond Fox Symes – these guys are just the ones with the bigger advertising budget, and the Today Tonight factor. They can either find you a specialised debt consolidation loan, or assist you with rolling your existing debt into your mortgage for a lower interest rate and easier repayment options.

If you go for the debt consolidation option, just make sure that credit card statement doesn’t begin to look like a cheque for $5,000. Remember those Looney Tunes cartoons, where the big mean bulldog would cook a roast chicken in his yard to tempt Sylvester over the fence? Well, that credit card is the roast chicken, and the bank (in conjunction with a healthy sense of greed !) is the big mean bulldog that will eat you up. Chop up your cards if you consolidate debt.

Debt Settlement Companies

While they are certainly more aggressively marketed in the States than they are here, debt settlement companies do exist. Sometimes they offer to reduce your debt by large amounts, for a certain fee. The theory seems sound enough, until you know the bare bones of it. You pay the settlement company, who negotiate with your creditors in order to lower your debt. BUT BUT BUT!

What really happens, is that the first few payments go straight to your debt settlement company. The next payments will begin accruing in your account with them, while they wait for your debt’s age to pass six months (or a certain allotted time, depending on the state you live in). After this time, your account will be ‘charged-off’, and can be settled at a lower rate by companies that would rather take ANY money than go to the hassle of repossessing things or going to court.

These charge-offs and the late fees are recorded with credit reporting bureaus, which makes it inordinately hard to get credit anywhere – even for a toaster on an interest free plan.

Also, in some countries, any charge-offs are considered income to you, and the government will tax them.

Consumer Credit Counselling

These services are often free, run by non-profit organizations to help people make a plan for getting out of debt. It will require sacrifices, there are no easy ways out and no debt-discounts, but this way will keep your credit intact and avoid the hassle of bankruptcy.

If you have a great idea of how to spend money … just not on paying off your debts, consumer credit counselling is like manna from heaven.

Online Advice

Sources like www.credit.about.com have plenty of good information – but it always pays to check with an Australian financial specialist, as rules and regulations can vary wildly between countries.

Bankruptcy

This is always a last-resort option. Bankruptcy is a paperwork nightmare, and if you want a loan for a car, house, TV, or just about anything later on, you’ll have a big red stamp over your name for at least the next 7 years. You should get a lawyer’s advice if you are considering bankruptcy.

Photo source: Andres Rueda