Finding a way to pay down your debt on your own has benefits. It’s typically the cost effective option and is beneficial in restoring your credit history. On the flip side, self-help solutions require specific circumstances—positive monthly cash flow, ability to make significant payments, good credit, etc.—that aren’t normally in the cards for those in financial distress. Following are some trusted self-help opportunities for anyone attempting to eliminate debt:
Evaluate your options:
Work with your creditors to evaluation options and solutions. Share the challenges you face and express your desire to identify a plan to get back on track.
Credit card balance transfers:
Obviously the point of a balance transfer is to move your debt to a lower interest card. Unfortunately, there are some issues to watch out for. Number one is that there’s almost always a transfer fee and a limited period for the lower interest. Secondly, there will be a credit check done which can lower your credit score.
You worked hard to build your savings. Using it to pay off your debt is a tough choice to make. Your savings is your safety net. It’s there to get you through tough times—unemployment, home and car repairs, medical bills, and more. Therefore, using savings to cover debts only makes sense if the circumstances are right.
A fast-tracked repayment plan means that you’re applying payments to your debts in a way that pays them off the fastest. If you can manage a $200 surplus from your budget, one creditor receives the majority of the $200 payment and the others receive just the minimum. Of course, the benefit depends highly upon the amount you are able to pay and the exact makeup of your debt portfolio. To crunch the numbers and figure out what would be the best way to go, use the Help Me Develop a Plan to Pay Off My Debt Calculator or other debt management calculators in the Resources & Tools section.
A hardship repayment plan is a special program offered by many credit card companies to provide alternatives for customers who are having difficulty making payments. Generally speaking, to qualify for a hardship program you have to have suffered a significant financial setback such as a job loss, unexpected long-term illness, large reduction in pay, or death of a spouse. For more information, check out Hardship Plans.
To learn more about fast-tracked and hardship plans, visit www.cccsofrochester.org.