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Credit Card Debt Help & Advice to Reduce Debt Fast

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HIGHLIGHTS
  • Evaluate your situation and what your credit card debt problems are.
  • Use a budget, and juice your budget. Stay within the guidelines for each major expense category.
  • If you have a debt problem, get a credit card debt consolidation solution fast!

Tips and Advice to Manage Credit Card Debt Effectively

Credit Card Debt Tips

Credit card debt is at an all time high, with almost one trillion dollars in revolving US consumer debt and $95 billion in credit card debt charging off each year. With rising costs of living and a struggling economy, it's getting harder to get ahead and keep up... especially if you are bogged down with credit card debt. But you can find your way out of debt and a path to a healthy financial future, and Bills.com is here to help. All you need is determination and a willingness to do what it takes, combined with some tips on how to effectively manage credit card debt.

Bills.com is here to show you the way out of credit card debt. You have several options for consolidating debt, which will make it easier to manage. Consolidation isn't the only step though. You also have to find ways to reduce expenses or increase your income. We'll show you how to create a budget and then plan to get free of credit card debt.

Quick tip #1:   Get a no-cost, no obligation analysis of your debt options from a pre-screened debt relief provider.

Here are three basic tips for how to manage troubling credit card debt:

Tip #1: Use a Budget

A solid financial foundation starts with a game-plan, and in personal finance the blue-print for that plan is your monthly budget. Make sure that you know what is coming in (your income) and what is going out (your expenses) each month. And, make sure that all systems are set for a healthy budget. Fundamentally, make sure that you bring in more than you spend. If your expenses are more than your income, it is time for a change - which means finding ways to quickly juice your budget. Bills.com has a free budget guide to help you get started: Free Budget Guide.

It can vary a bit based on where you are in your life (earlier in life you will be increasing your earning potential and may have student loans or a mortgage, and later in life you might lower your income and live off of your nest-egg), but our general recommendation is to strive to save about 10% of what you bring in as income each month. Aim to keep your debt payments below 15% of your take home pay and any payments toward housing, e.g., rent or all mortgage plus taxes and fees, should typically remain below 35% of your income each month. If any of these are significantly out of whack, you should re-evaluate your budget.

Tip #2: Juice your Budget and Increase your Cash-flow

If your budget leaves you with an empty feeling in your stomach, it might be time to look for ways to juice your budget. There are only two things that you can change - 1. increase income, or 2. decrease expenses. Since switching jobs or finding additional income streams is usually a lengthy process we recommend starting out by decreasing expenses. The obvious places to start trimming is discretionary expenses, such as cappuccinos and movies and dinners, but there may be some big savings in areas like lowering mortgage payments with a refinance loan or bidding out for new insurance rates and coverage too. Usually, the biggest bang for your buck, though, is to get rid of credit card debt. Unsecured debts, like credit card debt, is a waste of your hard-earned dollars since it doesn't build wealth or get you anywhere (like a mortgage or student loans or business loans) and it's usually the highest cost debt you can incur.

Tip #3: Get out of Credit Card Debt, and If You Have Too Much - Find a Debt Consolidation Solution

OK, so now you have your budget, you know where you need to cut back and where you can improve - but you still have that nasty credit card debt weighing down your budget and your life. What you need to do is to find out where you stand and how you can solve that debt.

If you have problematic credit card debt, there are many different debt relief options - including credit counseling, debt settlement, bankruptcy, debt consolidation and even bankruptcy if your debt is debilitating. You can take control of your situation and get out of debt with one or more of these five options:

Bills.com has created individual solution pages within the debt portal, but here is a quick summary of each one to get you started as well.

Credit Counseling

Credit counseling is a program that enrolls you on a debt management plan (DMP) which usually allows you to qualify for a concession rate from your creditors for lower interest rates and lower payments. The plan should include reduced interest rates, lessons in budgeting and money management, or a comprehensive debt management program.

Debt Consolidation

You may be able to consolidate your debts with a home equity loan, mortgage refinance or other debt consolidation loans. If you're confident that you'll be able to make the payments without building more credit card debt, debt consolidation can be an excellent way to reduce your payments and possibly reduce your taxes. You usually must be a homeowner to qualify for most debt consolidation loans. You can apply with Bills.com's approved debt consolidation lenders here: Debt Relief Quote.

Debt Negotiation or Debt Settlement

Debt settlement services offer to negotiate and settle your debts for less than you owe, many times reducing debts by as much as half. Debt settlement is an option for people who cannot afford their monthly payments, and who are not worried if their credit rating will be negatively impacted during the program. It's important to be aware that you are NOT making monthly payments and staying current on your debts while enrolled in a debt settlement program, so be aware of the credit impact and the potential collection harassment from your creditors.

Self-Help Debt Relief

The easiest debt relief options are things you can do yourself, as covered above, like budgeting and juicing your budget.

  • Tracking your spending
  • Checking your credit reports
  • Negotiating with creditors for reductions

Track your spending - Write down every penny you spend for one month, including monthly bills, automatic payments and bank charges. If you see a lot of unnecessary expenses like $10 weekday lunches or $4 magazines bought at a newsstand, cut those expenses and use the savings to pay down your debts.

Check your credit reports - The government provides three free reports a year at Annual Credit Report and 4 out of 5 people's reports have errors. If you have errors on your report, take the steps to have them removed, because they could be damaging your credit and causing you to get higher interest rates when you apply for credit.

Negotiate with creditors - Call your creditors and ask them to reduce your interest rate in order to keep you as a customer. If you know a payment will be late or you can't pay it, call the creditor before the due date, to ask for flexibility, arrange a new payment plan, or inquire about their hardship programs.

Bankruptcy

Bankruptcy should be your last choice for getting out of debt because it will damage your credit for 7-10 years and, depending on which type of bankruptcy you file for, you could be forced to give up some of your assets or assigned a long-term payment plan. There have also been legal changes put in place by congress that makes if more challenging to qualify for a Chapter 7 Bankruptcy, forcing many people to file for a Chapter 13 Bankruptcy which is really a repayment plan.

OK, so now you are armed with the credit card debt tips and solutions to start your journey.  Get on the right path and stay committed to getting rid of that nasty credit card debt and on to a bright financial future.

Comments (25)


Melanie S.
Madison, WV  |  December 24, 2011
I recently disputed two credit cards that were charged off in 2006. These accounts were opened without my consent. I never signed anything saying I was responsible for these accounts. The dispute results came back as updated. I wanted these removed because they are not mine. They are due to come off in 2013. What should I do? Should I write a DV letter or should I wait until I here something from LVNV? I live in WV and I believe the SOL for credit card is 5 years. Any advice will be appreciate.
Bills.com
December 30, 2011
You have two issues in your message. First, regarding the credit cards opened without your consent, my guess is there was some type of fraud involved. Identity theft, perhaps? If you were a fraud victim, follow the steps we outline in Identity Theft Recovery. Doing so will give you the documents you need to move on to the next step.

Second, send copies of the documentation I just mentioned to the credit card issuer and the credit reporting agencies that are including the fraudulent accounts in your credit report. Demand they remove the erroneous derogatory data from your credit reports.

If one or more of the parties reporting this information fail to comply, then consult with a lawyer in your state who has consumer law experience. Ask him or her if you have a cause of action (a legal reason to file a lawsuit) against the credit reporting agency or agencies for libel or another action under the Fair Credit Reporting Act.
Michelle S.
November 29, 2011
I have two credit cards that were charged off in 2005. They both appear on my credit report. Recently both accounts were sold to a collection agency, and now they also appear on my credit report under the collection agency. I'm concerned that with the OC (original creditor) and CA (collection agency) reporting, it appears as if I have more debt than I really do. I'm also concerned about the age of the debt. What are my options at this point? Thank you for your time and reply.
Bills.com
November 30, 2011
First, validate your debt. See Bills.com page about debt validation and learn how to validate and issues surrounding older debt, like statute of limitations.

Both the original creditor and the collection agency can report the debt. This does not mean that you owe the debt twice. See Bills.com page about collection agencies and credit reports for more information about reporting debts to credit agencies.
Charlotte S.
Murfreesboro, TN  |  November 15, 2011
I had a credit card from a store. I charged about 450.00 and over time paid 869.00 excessive fees and late fees amount to 1200.00...account sold to 3rd party asking for 2800.00....settlement amount of 1600.00 in 30 days....court summons is in January for a judgement of 2800.00. Since I cannot pay 1600.00 in 30 days they will accept 50.00/mo (I am unemployed) on the 2800.00....They claim now since I said I could only pay 50.00/mo on the 2800.00 They will file a judgement for 2800.00....stating I admit to owing 2800.00.....What should I do??????
Bills.com
November 15, 2011
Do you have a clear understanding of how the balance got to $2,800? Did you validate the debt, when you were first contacted by the collection agency?

I recommend that you speak with an attorney, to fully understand your rights and options.
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Charlotte S.
Murfreesboro, TN  |  November 16, 2011
Thank you for your response. And I will contact an attorney. I have my records.
Renee G.
Hampton, VA  |  November 11, 2011
I've tried calling Citibank in reference to the Hardship program. I must have answered some questions incorrectly because she says the computer doesn't show anything that can help me. Do you know what kind of criteria are they using to qualify people for the hardship program?
Bills.com
November 13, 2011
Read the information on the Citibank hardship program. Unfortunately, Citibank does not publish information about the hardship program. After reviewing the information consider all of your debt relief options.
Hal L.
Plainview, AR  |  November 07, 2011
I have considerable credit card debt with perhaps 6 companies since being laid off in March of 2009. Now I am being sued by one of the companies (and I'm sure more to follow), and would like to know how the Arkansas court will look at personal property. None of the debt, (and none of the credit cards), are in my wife's name. Is her car and other personal property in jeopardy of having a lien placed against it or her bank account?
Bills.com
November 07, 2011
See the Bills.com resource Responsibility for Spouse's Debt for a discussion of this issue. You mentioned Arkansas. Consult with an Arkansas lawyer who has consumer law experience to receive a more precise answer that is tailored to your circumstances.
Dana D.
Pelham, GA  |  October 26, 2011
I received a letter from a lawyers office for a unpaid credit card debt that said I had 30 days to reply or they would believe the debt was mine. I sent them a letter asking them to verify that the account was mine by sending me a copy of a contract that I signed. I recieved a letter back from them yesterday that only has copies of old credit card statements. Is there a letter I should send them back because I do not feel they validated the debt.
Bills.com
October 27, 2011
Send a notice of insufficient validation.
Sandra D.
Savannah, MO  |  June 26, 2011
I have been contacted from a Third party payor in Missouri for a credit card debit from 2000-2001. The letter states that I must pay the balance in full. On the phone I made payment arrangements what I could afford but made it very clear that I am wanting to see documentation of the debt. The debt includes a huge amount of fees associated with the amount due. I have now paid what I believe to be the original max balance amount on the card. What can I do to stop any further collections? Am I protected by the Mo Statutes Chapter 516.120 still? I do not owe the credit card company this huge amount. Please provide me with advice. I can send further information if needed. Frustrated in Missouri SD
Bills.com
June 26, 2011
First, read the Bills.com resource Missouri Collection Laws to gain a general understanding of your rights and liabilities. Missouri 516.120 concerns the statute of limitations on some consumer debts. A Missouri statute of limitations may apply to you for this debt — or it may not and I will not make that judgment either way. Second, if the statute of limitations has passed, Missouri law does not prevent original creditors or collection agents from attempting to collect the debt privately. Not does it prevent either from filing a lawsuit against a consumer. A statute of limitations gives a defendant an affirmative defense they can raise, which will cause the court to dismiss the case.
NANCY A.
San Antonio, TX  |  June 07, 2011
I live in Texas and received a judgement against me in July 2008 for credit card debt from March 2004. It now seems to me that this was a time barred debt by two months. Any how I failed to appear on the court date and a judgement was filed against me. It is now June 2011 and I received a letter from the debt collector attempting to collect this debt. What can I do? I do not own a home but upon my mother's death I will inherit the home I live in with my daughter. How can I protect this home from the debt collector and will I be able to pass it on to my daughter?
Bills.com
June 07, 2011
Hindsight is 20/20, but you should have exercised your rights and appeared at your hearing. A statute of limitations is an affirmative defense, which means in part that the defendant must raise the defense for it to be effective. A court will never raise a statute of limitations defense on behalf of a defendant because the court is a referee. I make this point not to berate you, but to educate other readers who might be earlier in the process of a similar situation.

The creditor now has a judgment against you. You mentioned you reside in Texas. See the Bills.com resource Texas Collection Laws to learn more about your rights and liabilities. The statute of limitation on a Texas judgment is 10 years. If the judgment was filed in 2008, it will expire in 2018 under Texas law.

You asked what to do. You have several options. First, negotiate a settlement for the judgment. Second, consult with a Texas lawyer about placing the property in a trust. Alternatively, consider filing a quit-claim deed for the property to your daughter. Again, consult with a lawyer who will analyze your situation in detail.
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Nancy A.
San Antonio, TX  |  June 07, 2011
I will eventually consult with a lawyer but I'm confused. Will it help to homestead the home once inherited? Will I be able to quit deed the property 10 to 20 years from now and how is that different from just leaving it to my daughter when I die?
Bills.com
June 08, 2011
Yes, filing for a homestead exemption is a smart course of action. The details for doing so, and the amount exempted, varies by state.

Please consult with a lawyer sooner rather than later regarding the judgment and the property you are expected to inherit. I realize a lawyer's time is not cheap, but the consequences for not knowing your rights and options to insulate the property can be very expensive indeed.

If you cannot afford a lawyer at this time, call your county bar association and ask for the name of the organization that provides no-cost legal services to people in your area who have no or low income. Make an appointment with that organization, and bring all of the documents relating to your debts and the expected inheritance to your meeting. The lawyer you meet will advise you accordingly.
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