Plan Options

 
 
 

Plan Options

DebtBlue is here for you and wants you to understand
your options for getting out of credit card debt.

Getting Out of Debt. What are my options?

So, you are buried in credit card bills. The late fees are piling up. The double-digit interest rates are making it nearly impossible for you to pay down the balance. And you are ready to do something about it? Congratulations! This is an empowering place to be. DebtBlue is here for you and wants you to know about all your options for getting out of credit card debt.

Option 1: The Do-It-Yourself Program

You can begin working to reduce your credit card balances in several ways on your own. Here are just a few tools you can use to get out of debt faster.

 

  • Cut up your credit cards or put them away. If you don’t have access to your credit cards, you will be less tempted to make impulse purchases when you don’t have the cash on hand. As you continue to pay down cards without adding to the balance every month, you will dig yourself out. Hide your cards. Live on cash. Act like your credit cards don’t exist and then you can be free from them.
  • “The safest way to double your money is to fold it over and put it in your pocket.” —Kin Hubbard

  • Focus on paying off the credit card with the highest interest rate first. Then pay off the second card and third in the same way. As you make progress you will be encouraged to keep going to paying down your debt. This has been called the Snowball Effect. A little savings grows bigger and bigger with each card you pay off.
  • Send more than one credit card payment a month. Believe it or not, you have an APR (Annual Percentage Rate) that relates to a Daily Rate, which is the APR divided by the number of days in a year (365). If your Interest Rate is 18%, then your Daily Rate is .049315%. Let this sink in. You are getting charged interest on your credit cards every single day you carry a balance. When you send in more than one payment a month, you reduce the balance that your Daily Rate is figured on. That, in turn, saves you money every day on the daily rate charged. Then you will be able to shrink your balance much more quickly.
  • Create a budget and stick to it. If you can develop a budget that gives you extra money each month, then use that to pay down your credit cards. There is little doubt it’s the most expensive money you use. So, saving money and investing in yourself by paying off your credit card bills will create a lifelong skill of living on a budget, paying off your credit card bills and using extra dollars for building savings.
  • “Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the ‘got to have it’ scale.” — Zig Ziglar

Option 2: Debt Consolidation

If you have several high-interest credit cards and the interest rates and fees are getting too high, you can look for a consolidation loan. This is a loan that consolidates all your credit card debt into one bill and one payment per month. Typically, the interest rate on the consolidation loan is less than the rate on your credit cards. However, your principal will not be reduced. You are combining all of your debt into one bill and paying one bank versus several. It’s more convenient. Your credit score will determine the rate you pay for the new loan. Debt Consolidation loans are typically single percentages and not double-digits, which is where the real savings happens. It is important that you know your first payments will be mostly interest. Keep that in mind as you figure out how long it will take to pay it off.

Option 3: Credit Counseling

A Credit Counselor will help you create a budget called a Debt Management Plan. This is essentially a payment plan to help you make consistent, on-time payments for your credit cards. You will want to make sure that they are accredited by the National Foundation of Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). These firms are compensated by the credit card companies themselves. They are paid a fee for your on-time payments. CBS News reports, “The biggest source of incomes for debt counseling services come from the credit card companies themselves. Creditors kick back a percentage of each monthly payment to the debt counselor. The credit counseling company wants to place you in DMP, so it can earn money from creditors.”

Option 4: Bankruptcy

The biggest advantage of bankruptcy is the fact that many of your debts will be written off and discharged. Your debts are legally waived. The downside is that bankruptcy can remain on your credit report for 10 years. You will also have legal fees and trustee fees that can get quite expensive. And not all debts will be wiped clean in Bankruptcy. You will still owe your most recent back taxes, your student loans, any fines you owe to government agencies, and alimony payments and child support payments. Bankruptcy will also make it difficult to get a new mortgage.

Option 5: Debt Settlement

DebtBlue is a professional Debt Settlement firm. Debt Settlement is the process of having an expert Debt Negotiator negotiate on your behalf with the credit card companies to have a portion of your credit card debt written off, wiped clean and forgiven for good. Once a portion of your debt is forgiven, the credit card company will no longer try to collect the portion of your debt they have forgiven. DebtBlue requires the credit card company to put the amount they will forgive in writing, so you no longer have to worry about it. It’s important to note that sometimes the credit card companies will still try to collect while you are in the negotiation process. However, if you choose to disclose you are working with a professional settlement company, some credit card companies will leave you alone. DebtBlue would like to give you a free, no-obligation consultation that explains all your options. Everyone is unique. DebtBlue wants to help you find the right debt solution for you and your financial situation.

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