Paying Off Credit Card Debt-credit Counseling Agencies

Five Things You Can Do to Help Avoid Bankruptcy

Get help: Credit counseling agencies help over 1.5 million American households a year manage their debt and avoid bankruptcy. A credit counseling agency can negotiate with your creditors to reduce interest or suspend fees, and stop collection calls. Under a debt repayment program, you’ll make one monthly payment to the agency, which will pay all your creditors.

Try to help yourself: With an explanation of your situation, some creditors may be willing to renegotiate terms so you can continue in paying off credit card debt. There are no guarantees, so make sure you get any agreements in writing, and agree only to payments you’re sure you can make.

Carefully consolidate: It’s possible you may be able to borrow against a workplace retirement plan, stocks or other securities you own, or the cash-value of a life insurance policy in order to pay off your debt. BUT all of those options have serious implications, so make sure you analyze the potential risks and consequences thoroughly.

Reduce, reduce, reduce: Not necessarily your waistline — but it may be a spot to start with. Differentiate between “needs” and “wants,” then eliminate the latter. Consider a smaller home or vehicle. Sell stuff. Slash your spending, and you may be surprised to find enough money left over to repay the debt you’ve accumulated (you might pick up a few good habits along the way, too!).

Quiet the calls: If you’re filing for bankruptcy just to stop collection calls, then remember, there may be other options. Working with a CCA is a good one. Another is using the Fair Debt Collection Practices Act, which says if you notify a collection agency that you don’t want to be contacted, then they must stop. They can contact you only to notify you that they’re taking legal action against you. The caveats: the law doesn’t apply to creditors collecting their own debts; and this helps only when you simply need a reprieve to get your financial life in order — it won’t dissolve your debt.