How to Consolidate Credit Card Debt With Poor Credit

A poor credit rating leaves you few options for making your debt load lighter. Although avenues of consolidating your debt are limited if you have poor credit, you still have some options. And after you pay down your debt, your score will improve. Taking action to get rid of your debt by going through debt consolidation agencies or using other alternatives can get you on the road to debt freedom. Getting out of debt does not happen overnight, but with some determination you can do it.

Instructions

1

Solicit help from a nonprofit debt consolidation agency that can help you to consolidate your credit card debt. These agencies will make arrangements with your creditors. You will make your monthly payment to the agency, and the agency will make the payments to the creditors for you. Most agencies have requirements that you have to meet in order to qualify. According to DebtConsolidation.org, these may include canceling your credit cards.

2




Borrow money from a family member if you can.

Borrow money from a family member if possible. Try to get enough to pay off all your credit card debt and make the payments you were making on those credit cards to them. You may want to include interest when paying them back to make it an official loan.

3

Take out a loan on your 401(k) if you have one available. You can take out a loan and pay it back through payroll deductions. You are borrowing from yourself and paying yourself back with interest. The money you were paying toward the credit cards can be used to pay off the loan early.

4




Transfer credit card balances.

Use a credit card with a high limit to transfer as many balances as possible preferably one with a low interest rate. If you have a credit card company that you have been dealing with for years and have a good pay history you can contact it to see if it will raise your credit limit. Tell the company what you are trying to do with your credit card debt. The idea is reduce as much credit card debt as possible to help boost your credit score. This will help you to qualify for better options to decrease the remaining balance on your debt.

5

Borrow money from a finance a company. The interest rates will be higher than most financial institutions. You will also need collateral to secure the loan. Your monthly payments may also be higher.

6

File for bankruptcy only as a last resort. Personal bankruptcy includes two types: chapter 7 and chapter 13. Qualifications for each vary. Other requirements also must be met before filing and discharge of a bankruptcy. According to Findlaw.com, "all debtors now have to get credit counseling before they can file a bankruptcy case, and additional counseling on budgeting and debt management before their debts can be wiped out." Bankruptcy laws vary by state. Check with a local attorney for more information.