How to Eliminate Unsecured Credit Card Debt

If you have debt, you have several options to eliminate unsecured credit card debt. Unsecured debt is debt that is not secured with collateral. Most consumer debt is considered unsecured debt, while a mortgage and a car loan are secured and you could lose these items if you default on these loans. So, as you can see, moving unsecured debt to a debt consolidation loan is not in your best interest. But there are other options for getting out of debt.

Pay It On Your Own

If you have $5,000 or less in debt, you may want to consider attacking it on your own. This begins with a plan. Before you do anything, you should call all of your lenders and ask them to lower your interest rate. Do not take no for an answer. Take the account with the smallest balance and pay as much as you can towards this account and make minimum payments on all your other accounts each month until the first account is paid in full. Find the account that now has the lowest balance and repeat the process. Decreasing your expenses and increasing your income will help speed the debt repayment process up. You will be debt free before you know it.

Credit Counseling

This is a debt relief alternative where you will consolidate most unsecured debts into one account that allows you to make only one payment each month without a loan. The interest rates on your accounts are reduced significantly and the fees are eliminated. This will allow the majority of your payment to pay the principle amount of the balance. If you are able to make a payment that is equal to 2% of the debt enrolled in the debt management plan, you should be debt free in 3 to 5 years with little or no damage to your credit score.

Debt Settlement

This is an option that reduces the amount of the debt owed through a negotiation process with the lender. There are many services that will do this for you, but most of them are expensive and they are charging you for something that you can do on your own. If you have debt that has not had a payment made on it in more than 6 months or you are certain that you will never be able to pay the balance in full, this may be debt relief alternative that you may want to consider. Using this method will impact your credit negatively, but it will not be as bad as what filing bankruptcy will do to your credit. This method should be used as an alternative to bankruptcy. With this option you should be debt free in less than 3 years.

Bankruptcy

This should be debt relief method that is used only after all other methods have been exhausted. This will stay on your credit record for 7 to 10 years. It is important to understand that in most cases your debts will be reorganized and not completely forgiven, but there are some cases where bankruptcy is the only debt relief alternative left. If this is your situation, the sooner you do it the sooner you can move on with your life.

If you have debt and you are looking for a way out, you do have options. What you choose all depends on how much debt you have, how far past due it is and how disciplined you are. You can become debt free. It just takes the motivation to want to be debt free more than you want things.

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