When you’re looking to clear credit card debt quickly, there are a few different options that may work. The problem for most consumers is that knowing which one to choose can be difficult. By the time the average person begins to seek debt relief, they’re already in deep trouble with debt. The question at that point becomes which option will provide you with the fastest route to get past the problem.
Answering that question isn’t really difficult. It’s just about looking at your current situation with debt, knowing your current credit score (you monitor your credit right?), and then taking that information and choosing the solution that best fits with your current situation.
In this article I want to cover four options that work to help get your out of debt faster. These options all directly relate to unsecured debts, such as credit card debt and/or personal loans or accounts.
Clear Credit Card Debt with a Consolidation Loan:
Your first option to take care of your debt problems is a consolidation loan. Often the problem here is that once debt has become a problem, your credit isn’t in the right shape to qualify for the loan itself.
This type of solution is most appropriate if you can:
- Pay off the loan in less than 5 years.
- Still qualify for an unsecured loan (or have the security for a secured consolidation loan.
I wouldn’t suggest consolidation for those who can’t take care of the loan quickly. Unlike most people think, a consolidation loan does look bad on your credit rating. Taking out that 7 – 10 year loan is really just extending the problem, and it will keep you from improving your credit rating (and likely from qualifying for any other type of credit) until the loan is paid off.
Clear Credit Card Debt with Debt Settlement:
Next on our list of solutions id debt settlement, also referred to as negotiation and sometimes as credit counselling. With this type of plan the actual balances owing are negotiated down. So your debts end up being paid off faster.
A debt settlement plan may reduce your bills from 30% – 75% (a typical settlement reduces debts by half). With the lowered balances, instead of taking 7 years to pay off a long term loan, the reduced balances can be paid off in about half that time.
Clear Credit Card Debt with Debt Management:
Another solution to look at is called a debt management plan. With this option the interest rates are negotiated down instead of the balances, and usually a payment plan of some sort is worked out. This type of solution is most appropriate if you have a smaller amount of debt, and fewer creditors to pay off.
Usually a debt management plan will close out your current accounts, and work in some sort of payment plan to pay off the debts as quickly as possible. These types of services are usually provided by the same companies that can help you with debt settlement (so they’ll be able to tell you if this is appropriate).
Clear Credit Card Debt with Bankruptcy:
As a final option, and this one is only suggested as an absolute last resort, bankruptcy can be used to clear credit card debt. The problem is that with the new bankruptcy laws that were established in 2005, bankruptcy usually means chapter 13, and you end up paying off the debts over time anyway. With that fact, debt settlement is usually the better option because it hurts your credit less (or at least for a lot shorter period of time).
Usually bankruptcy isn’t a suggested solution unless you have no other choice (ie you were just served with court papers, you have no money to participate in a settlement option, etc).
With four separate options available to you, it should now be apparent that even though you may be struggling with debt, you can seek help. You should also have a better idea as to when each type of solution is most appropriate.