Debt Relief Without Closing Accounts

Debt can take a heavy toll on your finances, as well as your personal life. Missing debt payments can lower your credit score and make it difficult to obtain loans, and can also contribute to stress and strained family relationships. Prolonged debt problems can lead to closure of your credit and loan accounts. You can use several strategies to get out of debt while avoiding account closure.

Negotiate with Creditors

Calling your creditors and requesting repayment solutions can help you resolve past-due debt and lower your account balances. By staying in contact with your creditors, you demonstrate that you are willing to repay your debts, even if you do not have the resources to do so immediately. A creditor may allow you to spread your payments over time, reduce your interest rates, waive late fees or temporarily postpone payments to allow you to catch up on your account.

Balance Transfer

Transferring your credit-card balances to a credit card or line of credit with a lower interest rate can enable you to apply more money to the principal and reduce debt more quickly. It also allows you to make just a single, consolidated payment each month. Avoid carrying credit cards after transferring your balances, as this can increase the temptation to purchase items on credit. Also, if you have missed credit-card payments, you may not qualify for a low-interest line of credit or credit card.

Credit Counseling

Take advantage of credit counseling. Counselors can work with creditors on your behalf to waive fees and reduce interest rates. Like a balance transfer, credit counseling often allows you to make a single payment each month. Credit counselors typically do not work with secured loans, such as mortgages or car loans.

Self-Management

Develop your own plan to reduce your debt. Make a list of all of your debt accounts in order of interest rates, and document your income and expenses to determine how much you can apply to your debt each month. Pay as much as possible toward the debt with the highest interest rate until you pay it off, then pay down the debt with the next highest interest rate, proceeding until all your debts are paid off.