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Tips for Danville, Indiana Residents With Large Amounts of Credit Card Debt

Bankruptcy is, of course, an option for those who are deep in credit card debt. Chapter 7 bankruptcy allows you to discharge the majority of unsecured debts, which include credit card debt. However, this option might not be the best available option for all cases. In some cases, you may be able to handle the debt without necessarily filing for bankruptcy. However, these options might be off the table, so to speak, for certain individuals, leaving bankruptcy as their best option. Below, we discuss tips for those with large amounts of credit card debt.

Balance Transfers

Balance transfers are a good option for those who still have a good credit card score. If you qualify, you can transfer the balance of a higher-interest credit card to a lower-interest account. This means that you will be paying less money on interest, and it will allow you to reduce your debt faster. You should also have lower monthly payments. You can also consolidate your credit card debt into one payment, which is helpful for organizing your finances. 

Debt Consolidation Loans

Debt consolidation loans are similar to balance transfers but offer better rates in general on interest. To qualify for a debt consolidation loan, you will need a good credit score. The better your credit score is, the lower your interest rate will be. Once you’ve received a debt consolidation loan, you will want to destroy the old card. If you consolidate your debt and then run up the charges on the old card, you will be in a worse situation than when you started.

Debt Management Programs

Those who can afford to make payments but are paying too much in interest can consider a debt management program as an alternative to bankruptcy. Such programs are offered by credit counseling agencies that will reach out to your creditors and attempt to negotiate new terms that are more manageable. Debt management programs, however, can damage your credit score. So, it is best to keep that in mind before applying. 

Debt Settlement

Debt settlement is reserved as a last resort because of the harm it could cause to your credit score. In some cases, a debt settlement will be just as damaging to your credit score as bankruptcy. You will be required to make a lump-sum payment to your creditors for less than the total amount that you owe. Some choose this method of resolving their debts in order to avoid bankruptcy, but that may not be the best option. Debt settlement is only a good option when you have enough cash on hand to make a lump-sum payment. 

The Bottom Line

In many cases, bankruptcy is the last best option available to you. While it will impact your credit score, you will not be required to pay the money back if you file under Chapter 7. In Chapter 13, you will be required to pay some of the money back, but not necessarily all of it. If you have any questions concerning your finances, you should talk to a Danville, IN, bankruptcy attorney today. 

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