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Mark Cappel
UpdatedMay 8, 2024

I'm trying to get out of debt. I have bad credit because of credit card balances and my interest rates and payments have gone

I'm trying to get out of debt. I have bad credit because of credit card balances and my interest rates and payments have gone up. Can you help?

thank you for your question. first, i want to assure you that you are not alone in this predicament; many consumers find themselves buried in debt before they even know what happened. thankfully, i can think of several possible solutions to your problem, but which option is the best for you will depend on how old the debts are, if you own property, and how much money you can afford to allocate to your debts on a monthly basis. if you follow the links below, i can put you in contact with a company that may be able to assist you in resolving these debts.

you can get a free debt consultation with one of bill's approved debt help partners, at no-cost and no-obligation.

if you own a home, a secured debt consolidation loan may be right for you. this type of loan is essentially a home equity loan which is used to pay off your other creditors. secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount. however, since your husband is unaware of your debt problems, a consolidation loan secured by your home may not be a practical solution, as keeping this type of loan from your husband could be difficult. also, be careful before you borrow money against your home to pay off credit cards and other unsecured loans; you will be converting what was previously unsecured debt into secured debt. this could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. however, secured debt consolidation loans work for many people, so this is an option to consider carefully-the savings center is a great resource to help you find a lender for this type of loan. makes it easy to compare mortgage offers and different loan types. you can get a free mortgage quote, without any obligation, from one of the pr-screened lenders in the lending network.

another option to consider is a consumer credit counseling service, or cccs. cccs companies offer numerous services, such as financial counseling and budget planning, as well as debt management plans (dmps). in a dmp, the cccs would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. you would then make a single monthly payment to the cccs which would distribute the funds to your creditors, based on the new payment amounts. there are several drawbacks to cccs, though. first, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. second, it may have a negative impact on your ability to obtain a loan, so you may not wish to enter into a dmp if you anticipate any large purchases, such as home or an auto, in the near future. third, the average dmp takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.

you may also want to consider the services offered by debt settlement firms. rather than making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts by 50% to 60% of your principal balances. these programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. in many cases they can also reduce your monthly payment toward your debt. there is one major drawback to debt settlement programs, though-they will significantly damage your credit while in the program and for at least a year or two afterwards. however, if you are currently unable to afford to pay your creditors, the hit to your credit may be worth the benefit of ridding yourself of credit card debt. because of your financial difficulties, you may want to stop focusing on the importance of your credit score. although you may have a good credit score, because of your low income and large debt amount, most lenders will likely see you as a high risk borrower, and may not be willing to extend you credit, so your actual credit rating may not good as you believe. a debt settlement program is probably the fastest way to resolve you debts, and once you repay your debts, you should be able to rebuild your credit score through careful management of your credit accounts.

hopefully, one of the several options i have described above may be able to help you. i encourage you to use as a debt help resource and to read more about these and other options available to you.

i hope this information helps you find. learn. save.



Dealing with debt

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in South Carolina, 37% have any kind of debt in collections and the median debt in collections is $2026. Medical debt is common and 22% have that in collections. The median medical debt in collections is $860.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



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