Credit Solutions

A credit card debt crisis can begin very slowly and innocently, but once it gains momentum it can become difficult to stop. The havoc it wreaks can bring you to your knees financially, but the good news is that there are different credit solutions available.

If you find yourself in financial hardship, the worst thing you can do is ignore it until it spirals out of control. Educating yourself about the credit solutions available can help you decide what the best course of action is for your situation.

Photo by Nick Fletcher.

Basically there are five credit solutions to choose from, listed here in ascending order according to the severity of the debt problem:

5 Credit Solutions

Discipline and Thrift – Reduce your expenses wherever possible and save more money toward paying off debt. This may also improve your credit score.
Debt Consolidation – Refinance your home or take out a home equity line of credit (HELOC) and use the money to pay off your unsecured debt. Depending on how you consolidate your debt, there may or may not be an impact on your credit.
Credit Counseling (a.k.a. Debt Management) – This can lower your interest rates but will not reduce the amount you owe to your creditors. There is no negative effect on your credit.
Debt Settlement – This can reduce your unsecured debt significantly, lower your monthly payment and get your debt paid off quickly. However, there will be damage to your credit.
Bankruptcy – For consumers with no other viable option, bankruptcy is a last resort. Severe long-term damage to your credit, other possible ramifications.

Discipline and thrift are recommended for those concerned about the future of their currently manageable debt. Debt consolidation is a viable credit solution for those with significant equity in their home and who can qualify for a loan of this type. Credit counseling is a responsible credit solution tailored to those who can realistically pay off their unsecured debt in full, provided that they get some assistance with their interest rates. Debt settlement is an aggressive credit solution that has emerged as an alternative to bankruptcy for consumers with large debt amounts, since its downsides are less steep and long-lasting. Traditionally, the most severe debt problems had been handled through filing bankruptcy. The new bankruptcy laws passed in 2005 have made that option much more difficult and time-consuming, and now only the most extreme debt problems should rightfully be handled in this manner.

Which credit solution is right for you? Fill out the online form on the right and a debt advisor will get in touch with you to answer all your questions.