Is Credit Card Debt Crippling Your Lifestyle?

Millions of Americans have gotten themselves in serious financial trouble with mounting credit card debt. When bills start piling up and interest and late fees begin rolling in, there is very little a debtor can do to get caught up without making huge sacrifices. Here are some ways that people are battling credit card debt and restoring their finances.

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For the Do-it-Yourselfer

Credit card debt is not always accumulated because of greed or overspending. Many times, even the self-sufficient among us get into financial jams that are just out of our control.

Sometimes we run into real life dilemmas where we have very little choice but to charge a card. Medical bills, family emergencies, loss of a job and other unfortunate circumstances can catch us off guard and unprepared. Many people have "emergency credit cards" just for this cause.

Regardless of the hardship, the debt can still pile up and overwhelm the card holder. For people like this, there are a number of things that they can do to try and work their debt out on their own.

The first step is to lay out a sound budget. Doing a budget can be quite simple, even if a debtor's income falls short of routine bills and expenses.

Here are four steps for creating a budget:

  1. List all income sources and how much money you will have coming in every month.
  2. Make a list of fixed expenses, such as mortgage payments, rent, car payments and insurance.
  3. Make a list of fluctuating expenses, such as credit cards, food, gas and utilities.
  4. Look at all your bills to decide which are priorities and commit to paying those first. Credit card debt, for instance, would not be as high a priority as your mortgage.

Contacting Your Creditors

With many people who are facing overwhelming credit card debt that is truly crippling their lifestyle, it can be helpful to contact creditors. This gives you the opportunity to explain the hardship and try to work out an agreeable payment schedule.

Even if a debtor cannot meet the original minimum payments, they may be able to negotiate a reduced payment plan and save on late fees and penalties. This can go a long way in saving not only money, but credit score.

Debt Collectors

If credit card debt has already gone into default, there is a good chance it has been turned over to a debt collector. These individuals can be very aggressive. They may send notices and call your work and home repeatedly in an attempt to collect the debt. Some threaten to take legal action they may or may not be really be able to take.

However, a debtor can send a cease and desist letter to any collection agency. By law, they will no longer be able to make contact. People who do this are typically involved with a debt consolidation program, have a lawyer helping them negotiate with creditors, or undergoing debt counseling.

If your credit card debt is truly overwhelming, you might want to consider talking to an attorney about filing for bankruptcy. This process has one of two goals: to release you from your obligations entirely if you are willing to give up certain assets, or to pay back some or all of your debts under a specific payment plan. An attorney can tell you whether you qualify for Chapter 7 or Chapter 13 – the two most common forms of consumer bankruptcy.