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Ways to Reduce Credit Card Debt

Is using a debt consolidation service a bad idea if you currently rent and would like to buy a house within 2 years? What woul

Is using a debt consolidation service a bad idea if you currently rent and would like to buy a house within 2 years? What would the best ways to reduce $8,000 in credit card debt be?

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Bill's Answer
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Bills.com | Find Learn Save

There are many forms of debt relief, including: i) debt consolidation loans, ii) credit counseling, iii) debt negotiation, and iv) bankruptcy.

In your case, the only solution that will not impair your credit profile is a debt consolidation loan.

Debt consolidation can benefit you in many ways: i) monthly cash flow, ii) total savings, iii) interest deductibility, and iv) your credit rating.

However, all forms of debt consolidation are not the same. You need to consider your specific situation, including if you own or rent your home, your monthly debt to income ratio, and your credit rating. A program like a debt consolidation loan may lower your monthly payment, get you a lower rate than most credit cards, and the interest is tax deductible.

Alternatively, a program like negotiated debt settlement may lower your monthly payment, get you debt free fast, save half of what you owe, but it could negatively impact your credit rating.

Bills.com makes it easy for you to apply, by following this link: Debt Help

These are a few of the considerations. If you would like more information, please visit our debt relief boot-camp.

I hope this information helps you Find. Learn & Save.

Best, Bill Bills.com

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  • 35x35
    Jun, 2009
    Mathew
    excellent article you have written here. thanks for the informative and entertaining read. quotations are a great way to inspire you to perform at your best and to remember sage advice from the smartest minds in the world.
    0 Votes

  • BA
    Mar, 2009
    Bill
    Dave, there are really three primary ways to reduce credit card debt: 1. File bankruptcy. 2. Negotiate settlements (typically about half of what you owe). 3. Reduce interest a bit with credit counseling. If you can afford the payments, you could call Chase and request a lower interest rate and try to lower your cost of borrowing. If you cannot afford the payments and are delinquent (or willing to go delinquent for a few months) you can try to negotiate the balance down. All of these will, however, hurt your credit rating... although it sure sounds like getting debt free is your first priority. You can call a firm like Freedom Debt Relief (www.freedomdebtrelief.com) to get a free consultation or apply for help through Bills.com
    0 Votes

  • DJ
    Mar, 2009
    Dave
    I owe $4000 to my chase credit card company? Is there any way I can reduce this? Other than of course paying it in cash?
    0 Votes

  • BA
    Jun, 2007
    Bill
    ANSWER: First, regardless of how you choose to repay the debts, I would recommend that you pull the equity from your home rather than taking the money out of your husband’s 401(k). The penalties associated with pulling money out of the 401(k) early rarely justify the benefits. As you mention in your question, there are significant penalties associated with drawing money from a 401(k) prematurely, along with an increased tax burden, which leads to most people losing around half of their money in penalties and taxes. Clearly, borrowing money from the 401(k) should be your last resort. To borrow money against your home, either through a home equity loan or a refinance loan, you will be required to pay lender fees and closing costs, along with interest, but these costs should be significantly less than had you borrowed the money from your 401(k) - and the interest is tax deductible. If you want to apply - you may be a good candidate for a combination program of debt settlement and a refinance. In this case, you could refinance your home and take less cash out than you owe and then supply the funds to a company that will negotiate settlements on your behalf for much less than you owe. I know this company does this program: Freedom Debt Relief www.freedomdebtrelief.com 1-800-544-7211 Or if you want a free debt consultation with one of Bill's approved debt help partners, click here: https://www.bills.com/debthelp/debt Therefore, in order to maximize the value you receive for the money you borrow against your home, I recommend that you consider the services of a debt settlement firm. These companies specialize in negotiating reduced balance settlements with your creditors to payoff your debt for significantly less than you actually owe. In many cases, I have seen successful debt settlement plans reduce debts to 40% of the balance owed or less. This means that if you owe $10,000 on a credit card, a debt settlement company may be able to settle the account for $4,000. Clearly, this would make paying off your delinquent debts much easier. Also, since you are borrowing the money against your home to repay the debts, debt settlement could significantly reduce the amount you need to borrow, meaning that you will pay less in interest when repaying the loan. Given the situation described in your question, I think that a debt settlement program, coupled with a home equity loan, may be the best way for you to quickly and effectively resolve your delinquent credit card accounts. To learn more about debt settlement and other debt relief options, I encourage you to visit the Bills.com Debt Consolidation Resources page at http://www.bills.com/debt-consolidation Enter your contact information in the Bills.com Savings Center at the top of the page, and we can have a pre-screened debt settlement provider contact you to discuss the options available to you and if a debt settlement plan can help improve your situation. In my opinion, Freedom Debt Relief is the best debt settlement firm in the industry. I believe that FDR has partnered with a mortgage lender to assist clients who want to resolve their debts through a settlement program using their home equity. When you speak with someone at the settlement firm, make sure that you mention the fact that you would like to fund your settlement program through a home equity loan, so they can connect you with the appropriate resources. I wish you the best of luck in resolving your accounts. I hope that the information I have provided helps you Find. Learn. Save. Best, Bill www.Bills.com
    0 Votes

  • 35x35
    Jun, 2007
    Joanne
    We have $20,000 CREDIT CARD DEBIT. We have$160,000 in our 401K and approximately $10,000 in other IRA. We own our home, appraised @ $250,000, OWE $120,000. Have $5000 cash. What is best way to get rid of the debt. Would not like to use 401K or draw equity from home. 50 years old. I earn 65,000 per year and spouse self employed in construction
    0 Votes

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