After I got my first job out of college, I admittedly went pretty crazy with my money. It was the first time I was earning a real salary instead of the minimum wage paychecks from all my part-time summer jobs while I was in school, and I just wasn’t responsible at all. I also applied for and received a couple of Visa cards, and racked up a mountain of charges for clothes, electronics, and bar tabs. It didn’t take long before I was in over my head. Since I wasn’t able to cover much more than the minimum payments each month, I was sinking deeper and deeper into red ink. Once I realized the situation had gotten out of control, I started looking for a good way to settle credit card debt quickly.
One of the most popular ways to settle credit card debt is to consolidate. The consolidation process is rather straightforward: you secure a loan to cover all the outstanding balances on your cards and then work towards making monthly payments on the loan. This is a sound way to settle credit card debt because the interest rate on the loan will be far less than the extremely high rates that Visa and MasterCard are allowed to charge, so you end up saving money in the long run. Plus, it’s a lot easier to make a single payment every month than trying to keep track of five or six of them.
Another way to settle credit card debt is to negotiate with creditors to try to reduce payments. This is a tactic that has worked well for some folks, especially those who are on the verge of filing for bankruptcy protection. After all, if they do end up filing for Chapter 11, then the creditors will be left out in the cold. So if you can present a good case as to why you should be allowed to pay, for example, 60 or 70 cents on the dollar for the amount you owe, then you might be able to come to a settlement in this manner.
And finally, people can also get themselves declared legally bankrupt as a way to settle credit card debt. This is a drastic step that will impact your personal financial situation for many years to come, so it’s a decision that shouldn’t be made lightly. At first, I considered doing this, but after talking to a consultant decided that I didn’t want to be saddled with this stigma for the next decade, so I abandoned the idea.
In the end, I figured consolidation would be the easiest way for me to settle credit card debt. I qualified for a decent loan at a reasonable rate, was able to pay off all my Visa cards, and am very close to paying off the consolidation loan as well. Once I emerge from this hole, I plan to act a lot more responsibly with my money so I never find myself in this predicament again!