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Credit Card Debt Help & Advice to Reduce Debt Fast

By Brad Stroh Apr 12, 2013
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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.

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Comments (58)


Denise C.
College Station, TX  |  April 12, 2013
I defaulted on 4 credit cards. Two settled over a year ago. I paid off with settlements then had to claim the rest (that they relieved me of) on my taxes. I have two more that have not been settled and it has been since 2008. I received a call today that one is at $8000. I can't pay any lump sum and have no way of doing so. Can they place a lien on my house as they have threatened? I can't even remember what the other credit card is. Is there a way to find out what it is and if they have wrote it off? Is there a time limitation? I need to buy a new car, am I going to be able to get a loan? I greatly appreciate your help.
Bills.com
April 16, 2013
A credit card creditor must obtain a judgment in court before it can place a lien on your real property.

Your first step should be get a free credit report at annualcreditreport.com. Check to see when your date of last payment on the debt was. That will determine the date you use to calculate the statute of limitation on debt in your state. If the SOL has passed, be sure not to make any payment, as you can restart the clock on the SOL by doing so.

Whether you can obtain car financing at a decent rate depends on your credit score, as well as whether there are judgments against you. Once you figure out the SOL issue, check with a bank or credit union to learn if you can obtain a car loan, how much you can borrow, and at what interest rate.
Lindsay B.
Lebanon, OH  |  March 26, 2013
I have been unable to pay my Citi credit card since October. I got a letter in the mail saying that unless I establish a payment arrangement within 30 days they are filing a lawsuit. I do not have any sort of income right now. I owe $3,550 (began at $2,990 before fees). I start college in two months and may be able to pay with student loans. Should I pay this card off with student loans? What is an acceptable payment arrangement? I do not want them to think I have a stable income.
Bills.com
March 28, 2013
Generally, I do not recommend people pay-off existing debts with student loans. Student loans are intended to provide for your education, which has the potential to boost your income later. Short-circuiting your education by misdirecting your student loan strikes me as short-sighted. Two recommendations:
  • Consult with the Bills.com Debt Coach tool for an online, no-cost, no-nonsense analysis of your situation.
  • Call your county bar association today and ask for the names of local organizations that do pro bono (no cost) work for low- and no-income people in your area. Make an appointment with one of the organizations, and bring all of the documents you have regarding the debt to your meeting — especially the menacing letter you mentioned. The lawyer you meet with will advise you of your rights and liabilities should Citi or its collection agent file a lawsuit against you.
Teresa H.
Thomasville, NC  |  July 24, 2012
I have a question. my mother got herself in a lot of credit card debt. She doesn't have a way of paying the bills. Shes on a fixed income social security. I have no way of helping her. She's 75 years old and doesn't have any other means to pay it. She lives in a home that she owned but I own it now as of a year and a half ago. It's in my name only. They have put a lien against her and her properties. but she doesn't have anything. Can they put a lien against me and my property since she owned it?
Bills.com
July 25, 2012
First, read the Bills.com resource Social Security Garnishment to learn more the Social Security issue.

Second, if the home your mother resides in is titled in your name and not hers, then your mother's judgment-creditors have no claim to your property.
Steven L.
Cedar Grove Twp, NJ  |  June 26, 2012
We are in NJ. A default judgment was entered in 2002, against my wife, regards a bad check. Amount is approximately $800. She is unsure if she was served, and does not have records to prove she wasn't. However, the creditor, a car dealership, has been bankrupt and out of business for several years. We corresponded with the attorney of record and he informed her all records for the company were lost in a flood and has no info regarding the matter. Should she file to vacate the judgment? What other grounds, besides improper service may be argued to vacate a judgment? Thank you.
Bills.com
June 27, 2012
Take the judgment to a lawyer who has civil litigation experience, and preferably one who has appellate experience. The civil procedure rules for judgments are exact and usually interpreted strictly by judges. The plaintiff/judgment-creditor here may have missed deadlines, filed the judgment improperly or at the wrong courthouse, or referred to the wrong case number, and so on. There is really no limit to the number of things a judgment-creditor could have screwed up. A sharp-eyed lawyer who knows New Jersey civil procedure rules may find something sufficient to use for an appeal.
Avatar
Ken R.
Beaverton, OR  |  June 27, 2012
A "sharp-eyed lawyer who knows New Jersey civil procedure rules may find something sufficient to use for an appeal" will demand a retainer of at least $5,000. On a judgment for $800, something tells me it may be the judgment debtor looking at bankruptcy next.
Avatar
Ken R.
Beaverton, OR  |  June 27, 2012
Bankruptcy of the judgment creditor is not grounds for having a judgment vacated. All debts owed a bankrupt judgment creditor pass to the ownership of the bankruptcy court trustee as representative of the creditors for distribution to the creditors. You may or may not have grounds due to defective service. I would first check what the requirements are for proper service as they can be quite liberal. Personally, I would just leave it alone. A 2002 judgment will not appear on your credit reports and, if as you say, the judgment creditor went bankrupt then nobody will be after you to collect on the judgment unless you attract the attention of the bankruptcy trustee.
Holly W.
Santa Ana, CA  |  June 01, 2012
I have a question re: SOL in CA. I understand the SOL is an affirmative defense and that collectors can still initiate a lawsuit (none have yet), but I just want to know if my debt is outside the four year statute of limitations. I feel like I would have more leverage to negotiate the debt if I am certain the SOL has passed. Here are my facts: My credit report indicates I was 30 days late in March 2008 on one card and 30 days late in April (I can't find the date of the last payment I made or when the last payment was due). Is it safe to assume Breach of Contract (BOC) occurs/Cause of Action accrues: April 2008, March 2008, or February 2008? That is BOC on first card is March 1 and BOC on second card is April 1? I filed bankruptcy on July 16, 2008. The bankruptcy was dismissed (yes, dismissed, not discharged) on November 6, 2008 because I did not meet the means test for chapter 7. Trustee wanted to convert to chapter 13 and I opted to take my chances with the creditors. I calculate that the SOL runs out for sure by August of this year? Thoughts?
Bills.com
June 01, 2012
Please see the Bills.com resource California Statute of Limitations for Contracts for a general discussion of when a cause of action for breach of contract accrues in California. The discussion on that page is much more specific and accurate for California readers than this article.

Relying on a credit report to find an accurate date of first delinquency is problematic because even though creditors are supposed to, under federal law, make accurate reports to the credit reporting agencies, they sometimes do not. Therefore, take anything on your credit report with a grain of salt.

Look at the date of first delinquency on each account. Assuming the reports are accurate, and that's a mighty big assumption, I would look to that date as the start of the statute of limitations clock for that account. Add to your four-year clock the eight months these accounts were stayed by the bankruptcy. The result should be when the clocks run out. However, as I pointed out, I made an enormous assumption here.

I agree with your thought that a consumer's leverage increases exponentially when the state's statute of limitations for breach of contract runs out. Consider a pay for delete to reduce the harm the account causes your credit score.
Valerie M.
Wilmington, NC  |  April 19, 2012
I believe I am Judgment Proof. My husband owns our house free and clear but the title is in his name only. So in North Carolina even though my husband owns property creditors cannot come after him if I am not on the title. Non-Community I believe it's called. Also, I do not work and only own a 1998 Camery car. I have no property except my car. I am thinking about meeting with a bankruptcy attorney to to sure that I am Judgment proof. If I am, I understand that I should let my creditors know that I met with an attorney and that I am judgment proof. I suppose then can still sue me but I can't amagine that will get anything. Can you please give me your thoughts on this. Thank you so much!
Bills.com
April 19, 2012
"Judgment-proof" is not an official classification recognized by law like being male, female, married, or a resident in a certain state. It is, however, a practical reality for judgment-creditors trying to enforce a judgment. Your calling yourself judgment-proof will not necessarily cause your creditors to stop pursuing you. In time, and with evidence, the judgment-creditors may come to consider you judgment-proof, but that is for them to decide.

Consulting a bankruptcy lawyer to learn your options and possible liabilities is an excellent idea I encourage.
Frank M.
April 13, 2012
I am from california I have a debt almost 7 years old if I move out of the country and they contact me does that cause the sol to be invalid even if I was living in Ca when the sol took effect?
Bills.com
April 18, 2012
Leaving the country can place the SOL on hold. SOL issues are complicated. If you are seeking legal advice, then speak to a lawyer, experienced in consumer law.
Frank M.
April 13, 2012
if the sol is up and a creditor contacts me and I tell them if they want to mark the debt resolved for 500 dollars does that cause the sol to restart?
Bills.com
April 18, 2012
It is not a wise idea to reaffirm a debt, as that can cause the SOL to restart. If you intend to negotiate do not acknowledge the debt either by phone or in a letter.
Frank M.
San Marcos, CA  |  April 13, 2012
I have two cards that are 8 yrs old. I had a credit repair start to repair my credit and may have disputed them before the SOL was up. Would that count to extend the SOL? I have not made any contact or paid anything since 05 though I hired a credit repair in 09, which disputed them. Would that cause the SOL to be invalid?
Bills.com
April 13, 2012
People often mix the rules for state statutes of limitation for debt and the federal rules for credit reports. The two are separate from each other. If the credit repair company you hired disputed the debts with the credit reporting agencies, which is what they probably did, then this had no impact on the clock for your state statute of limitations. However, without knowing exactly what steps your credit repair company took, it is impossible to say that with 100% certainty.
Frank M.
San Marcos, CA  |  April 12, 2012
My question is in California I have two cards that are way past sol my question is they have been purchased by another lender possably before the sol was up it has been 7 years since I made any contact or payment to the cards My question is if they purchase the credit debt do they have another 4 years from the time they purchased it or is the sol still valid from the first non payment or delinquency as I now have accet acceptance trying to contact me I have not called them back but want to do so and let them know the sol is way past and maybe offer them something to remove it and stop reporting it also since it is close to if not more then 7 years since first delinquency do they have to stop reporting it soon? or do they go buy 7 years from when the new creditor purchased the debt?
Bills.com
April 13, 2012
People often confuse and mix the rules for state statutes of limitation for debt and the federal rules for credit reports. The two are separate and independent of each other, and need to be analyzed separately.

As you mentioned, the California statute of limitations for contract debt is 4 years. The 4-year clock starts running from the date the payment was due, or the last payment was made, or a reaffirmation/acknowledgment was given. No other events, such as an original creditor selling the account, or one debt collector selling the account to another debt collector matters to a California court.

You mentioned the FCRA 7-year rule. This time limit sets how long a derogatory can appear on a person's credit report. It, as I mentioned, has nothing to do with the state statute of limitations, and the state statute of limitations has no impact on the FCRA 7-year rule. The key date here is the date of first delinquency. No other events, such as an original creditor selling the account, or one debt collector selling the account to another debt collector matters under the FCRA.

Follow the links I mentioned in this comment to learn more about these issues.
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