The Best Way to Handle Credit Card Debt

Ignoring credit card companies or debt collectors isn't going to make your credit card debt go away. The MSN Money website reports that you should take a proactive approach to your credit problems by getting help from a qualified source or negotiating with the debt collectors yourself. Refusing to return phone calls or respond to letters could lead to stepped-up collection efforts --- including possible lawsuits. Card companies and debt collectors often agree to payment plans, even on older debts, according to MSN Money.

Instructions

1

Schedule a meeting with a nonprofit credit counselor. A loan officer at your bank or credit union can offer a referral for a reputable counselor in your area.

2

Authorize the credit counselor to obtain a copy of your credit report. Credit reports are available for free through the Annual Credit Report website. Review the credit report with your counselor and discuss your credit card debt. The counselor conducts an overall review of your debt situation, including the credit card debt. The broader review can help determine the best advice for your circumstances.

3

Ask the counselor about solutions for your credit card debt. Possibilities include debt management plans, which are offered by counseling agencies. These plans allow counseling agencies to contact credit card companies on your behalf to negotiate lower interest rates, a reduction of fees and lower monthly payments that fit your budget. The counseling agency makes payments on your accounts each month after receiving a lump-sum payment from you --- along with a monthly management fee.

4

Choose a strategy for handling your credit card debt after being briefed by the counselor. Also consider debt settlement, which allows you to pay off credit card accounts for less than the full amount owed, and bankruptcy --- an option of last resort, according to the Federal Trade Commission.