Settling Your Credit Card Debts – Part 4

Explore your options for managing and settling credit card debt.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, says slow down and consider how you can get out of the red without spending a whole lot of green.

So what are you options?

Working with a debt settlement company is just one option for dealing with your debt. You also could negotiate directly with your credit card company, work with a credit counselor, or consider bankruptcy.

Talk with your credit card company, even if you have been turned down before. Rather than pay a company to talk to your creditor on your behalf, remember that you can do it yourself for free. You can find the telephone number on your card or your statement. Be persistent. Keep good records. Your goal is to work out a modified payment plan that reduces your payments to a level you can manage. If you don’t pay on your debt for 180 days, your creditor will write your debt off as a loss; your credit score will take a big hit, and you still will owe the debt.

Contact a credit counselor. Reputable credit counseling organizations advise people on how to manage money, bills and debts; help them develop budgets; and usually offer free information and workshops. They should discuss your entire financial situation with you, and help you develop a personalized plan to get you out of debt. A new law requires credit card issuers to include a toll-free number on their statements that directs cardholders to information about finding nonprofit counseling organizations. The federal government maintains a list of government-approved organizations, by state, at the website of the U.S. Trustee Program.

Occasionally, a credit counselor may suggest that you consider filing for bankruptcy. Declaring bankruptcy has serious consequences, including lowering your credit score. Filing for bankruptcy under Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, which they might otherwise lose through the Chapter 7 bankruptcy process.

To file a complaint or get free information on consumer issues, visit the FTC website or call toll-free 1-877-FTC-HELP (1-877-382-4357); TTY:  1-866-653-4261.

Watch a video, “How to File a Complaint,” to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Another resource is USA.gov of General Services Administration and GobiernoUSA.gov. They are spearheading a bilingual online campaign titled Help for Difficult Financial Times/Ayuda para superar dificultades económicas to assist individuals and families throughout the United States.