Tips On How To Pay Off Your Credit Card Debts

By Rebecca Taylor

Eliminating credit card debt legally will free up funds in your monthly budget. It will also improve your credit score so you can qualify for better rates on future purchases, such as a car or home. Lower your interest rates first to get this process started. Then develop a payment strategy. If you need some outside discipline, turn to a debt management company.

Get Your Interest Rates Down First

It can be very difficult to pay off larger credit card bills if your interest rates are on the high side. But by lowering your interest rates, you can increase your payment on those cards' balances without increasing your overall payment.

Consolidating with a loan and opening a new credit card are the two most popular ways to reduce interest. You can then conduct a balance transfer from your old card to the new one, which would often have an introductory rate. You can also get low rates on a longer term basis by consolidating with a home equity or personal loan - be reminded, though, of the closing costs.

Develop A Payment Plan

A payment arrangement would be the next step in getting out of debt. It helps to set aside the lowest balance and make extra payments towards it. Then when it is paid off, use those extra funds to pay off the next lowest balance.

The other option is to make extra payments on the highest interest account. This could mean a lot of savings in the long run for your interest costs.

Hiring A Debt Management Company

Debt management companies can be of assistance when the next logical option for most is to file for bankruptcy. For a small fee, they will pay your bills, lower your rates, and structure a debt elimination plan. It may lead you to a lower credit score, but at least it wouldn't be as bad as a foreclosure or bankruptcy.

Before you commit to a payment arrangement, make sure you've considered all your options. The greatest savings are often found with the do-it-yourself approach of debt consolidation and budgeting. But if push comes to shove, don't file for bankruptcy yet - you should first see a debt management company and hear what they have to say.

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How to go about collecting debt

By Mark Jones

When you are owed money, going to the courts is always seen as an absolute last measure. It's costly, expensive, and is not always guaranteed to work. It can be much more trouble than it's worth. But then what do you do? How do you get past that sickening feeling that someone simply is not going to pay up, and get the money you are rightly owed?

Speaking directly with the person who owes money is often all it takes. Many people bank on the fact that you just don't want to face them, or are too nervous to. They would easily ignore a letter, but a direct conversation is enough to bring them into line. However there are risks in speaking in person. Often arguments can result, and you may end up getting dragged into conversations that trick you into saying something that could be used against you, making the situation worse. This is when it helps to simply draft a simply letter stating the situation, and sometimes threatening legal action is all it takes.

Hiring a solicitor to write that letter for you is a more expensive step to take, but it can often bring in more of a result, and in the process, you've spoken with a solicitor and been made aware of where you stand legally and other steps you can take.

Another less expensive option is using a mediator. For a smaller fee, a mediator will listen to both sides of the situation and try to come to a resolution. It is important to know that if you do end up in court, they will have expected you to have tried using a mediator first.

Another avenue to go down is to use a debt collection company. These companies are appealing as they simply "take over" and allow you to leave the issue in their hands and they do the hard work of hiring a solicitor and going through the process. They do take a percentage of the collected money, but some businesses find it worth it as it gets the job done.

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