- Contact your credit card companies and explain your difficulty in paying your bills. The company may have a program in place that can help you. You may be able to reduce your interest rate, which will give you time to catch up on payments. Another options during negotiations is to settle your debt for less than what you owe in exchange for closing your account.
- Good credit counseling agencies provide genuine budgeting education and money management skills training to their clients. If you are having trouble paying your bills, review your money management skills with a neutral third party. By setting, and following, a realistic budget, you may be able to "find" additional funds for paying off credit card balances faster.
- Some credit counselors may offer a debt management program (DMP). If you agree to participate in a DMP, your counselor may contact your creditors and negotiate lower interest rates and payments. The counselor then consolidates your bills at the lower rates, and you'll make one payment each month to the credit counseling agency. In turn, the credit counselors send your payments on to your creditors.
- The fact that you settled a debt for less than what you owe or entered into a DMP is usually reported to credit bureaus. This can hurt your credit score, though it may cause less damage than filing for bankruptcy or ignoring your debt problems and letting your accounts go into default.
- There are "credit counseling" and "debt settlement" firms that offer to settle your balances for "pennies on the dollar," but only after you pay money for their services. In some cases, these companies take off with your money and never settle any of your debts. Work with nonprofit credit counselors approved by the U.S. Bankruptcy Court to offer counseling and education services to those who may file for bankruptcy (see the Resources section).
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