I'm Buried in Debt ? What Now?

Some people find themselves with way too much debt on their credit cards and not enough income to bring the balances down.  What can be done?  Here are some suggestions.

* Start bringing in more money.  You might need to get a second job, or search for a better paying one.  There are also some ways you can make extra money from home, such as babysitting or doing direct sales.  If it comes to this, putting as much of the additional funds as possible toward paying down your debt will help you get it down to a manageable level quickly.

*When you show a willingness to pay many creditors are ready to work with you.  Call your credit card companies and see if they will negotiate a lower monthly payment or bring down your interest a bit.  You could even try to negotiate a reduction in your overall balance, however you may find this difficult to accomplish without legal representation.

* Consolidate your debt.  Home equity loans, or second mortgages, are often used by people who are in an unmanageable amount of debt, or have too much debt, to consolidate the debt and reduce interest charges and monthly payments.  The trouble is that by doing this, you put your house on the line.

You may also pay more in interest than you realize, because even though the interest rate is lower, you will be paying for a longer time.  If you choose this route, paying more than the minimum payment each month will save you money.

If you do not want to put your home at risk you might try applying for a new credit card with a high limit and low rate.  Then you can transfer the balances of your cards to this one card and reduce your monthly expenditures.

Once you have consolidated your debt you have to be careful not to begin charging things again and run the credit card balances back up.  You will be in worse shape than you were in the beginning.

* File for Bankruptcy.  This should be your last resort.  Chapter 7 bankruptcy wipes all of your debts clean, but you may lose some of your property depending on your individual circumstances.  Chapter 13, which is now more common because of changes in the law, sets up a court-ordered payment plan to pay off your debt.  Either type will stay on your credit report for 7 years, and on public record permanently.