A credit card debt elimination plan can be accomplished in various ways. All of them require patience and fortitude to see them through. Unfortunately, there are no magic solutions outside of winning the lottery or inheriting a large sum of cash.
Personally, I am using a combination of the debt snowball method laid out in Dave Ramsey’s plan and the use of CareOne, a debt management company The latter was a requirement in order for the bank to accept a short sale on my house.
Here are some pros and cons of the different methods of credit card debt elimination:
Debt Consolidation – This is a loan that consolidates all credit and other personal debt outside of a mortgage. It can be a personal loan, a home equity loan or a home refinance loan. I have done this several times in the past and I wouldn’t recommend it unless you have a home that you know will sell for a profit. Many people, including myself, end up with even more debt using this method.
Debt snowball – This is the method I laid out in my Freedom Debt Management Plan post. Debts are paid off one by one from the smallest balance to the largest. This has been working great and so far I’ve paid off over $10K in just a few months.
Debt management – Debt elimination companies have cropped up over that last few years in abundance. I work with Care One, (owned by CESI – Consumer Education Services Inc) a company involved exclusively with credit card elimination plans. They work with your creditors in lowering the interest rate and negotiating a monthly payment. Then a flat amount is taken out of your checking account each month and they pay the bills for you. This works perfectly for me as there is no question about them getting paid. (*Note: they will not work with American Express or federal student loans)
Debt settlement – Care One also offers debt settlement services as do a host of other companies. This method asks the credit card companies to accept less than the balance owed, cutting the amount by 40% or more. This can be a very ugly process if not done properly.
Bankruptcy – Sometimes bankruptcy is the only choice for those who’ve lost everything in terms of job security and money coming in. Starting over with clean slate may be the best option depending on the circumstances.
Credit card debt elimination is essential to building true and lasting wealth that will give you a sense of financial peace.
