Here's the problem: You're swamped in credit card debt. Your credit score is hanging in there, so you don't want to trash it by defaulting or declaring bankruptcy. You just need a little breathing room: more time to pay off your cards, or monthly payments that are lower.
Here's the solution: refinance your credit card debt. If you refinance, you don't have to negotiate or settle with the credit card companies. You pay them off just like they want, they love you, and your credit score stays good.
The point of refinancing is to get a loan with lower monthly payments and use the proceeds from the loan to pay off your credit card debt. But first you have to know how much you're paying now.
Get brave and write down how much you owe, total, on all your credit cards, and how much you're paying each month. Heck, throw in your car loan or student loans or anything else, too. If you can get a better deal when you refinance your credit cards, you might as well refinance other loans, too. Look up what interest rate you're paying also, on each loan. It ought to say somewhere on the bills they send, or if you log in to your account on their website.
Now, go shopping for a better loan to refinance all that crap. One place you can start is to check for credit card balance transfer offers. Sometimes credit cards will offer a low "teaser" rate if you transfer your balance to them, which is kinda like refinancing. It won't give you any more time to pay off the debt, but the low interest rate will make your monthly payments cheaper. There's probably a one-time fee of a few percentage points, so check that out, but if you're paying high interest rates and your credit score is good enough, it's probably worth it.
Or look for a typical credit-card refinancing loan. Banks and credit unions like to hold onto your assets, so if you default, they know they've got some way to make you pay. It's not as painful as it sounds. What do you own? Some equity in a house or condo, maybe? A retirement plan? A life insurance policy?
Walk into a local bank or credit union, or look online for credit card refinancing loans or secured loans, and talk about your assets. Say you want to refinance your credit card debt and tell them how much it is. Ask what kind of a deal they'll give for a home equity loan, a HELOC (Home Equity Line of Credit), or if you put up your life insurance policy or retirement plan as security. Or if you look online, start first looking for home equity loans or secured loans, and read the fine print on the websites.
If you don't have any assets worth talking about, but your credit is decent, it's still worth looking into credit card refinancing loans anyway. You never know. With the interest rates that credit cards charge, there's lots of room to find something cheaper.
If you get an offer that sounds good, check out the place you're dealing with, unless it's a bank or credit union you already know. Look for complaints online, or check with the Better Business Bureau, and make sure they're legit. Think real hard and make absolutely sure you can make the new payments, because you'll be pledging your assets if you default, and you don't want that to happen, because then you'll have more problems to worry about.
Then take out the loan and pay off your credit cards. Be done with them. Cut the suckers up. No more! Pay the new lower payments till the refinancing loan is paid off, and you're good to go.
A story. It fits with credit card refinancing. Really. Trust me.
I took the Greyhound to Georgia a couple weeks ago and had a layover at the Atlanta bus station. Don't know if you've been there, but people are always panhandling and pushing drugs. An old fellow showed me a gold chain he "found at work" and wanted to sell cheap.
I told him no thanks, so he wandered over to a young guy standing by the lockers. Well, that caught my interest. Because I could tell who the locker guy was. He was wearing a new plain grey sweatshirt and matching jogging pants and new canvas sneakers--the clothes that convicts get when they're let out of jail and given a bus ticket. Here he was, his crime just paid for, a chance to start fresh, and now he'd be tempted to buy stolen merchandise that he could make a profit on, when he surely needed money.
I wondered what he'd do. The gold-chain-fellow made his pitch.
The guy in prison clothes just looked at him, laughed, and said, "You know where I've come from. You don't want to be asking me."
Whatever lesson he was supposed to learn, he learned, and he wasn't going to fall back in that trap again. You have to admire a guy like that.
That's the secret to refinancing credit card debt. Use it to get yourself out of trouble, then promise yourself that you'll never get in trouble with credit card debt again.
9:12 p.m. January 22
There are low-interest loan possibilities through HUD and government agencies, if you have equity in your home, but you really do need to realize that you're putting your home at risk. Credit cards are unsecured loans, and refinancing them with a secured loan makes good economic sense, since the interest rate will generally be lower (all else being equal), but that's because the bank has less risk, since they can come after your home if you default.
6:41 p.m. January 23
see, this aint right. U can settle credit cards and not pay them off, go to one of them debt setlement places an they let settle for less
9:22 p.m. January 23
That's true, settlement is a possibility. If you want to preserve your credit rating, though, you need to make sure the credit card company will agree to report your debt paid in full and not put a bad mark on your credit reports. They may or may not agree to it--it's not guaranteed or even likely. Debt settlement companies are known for promising more than they can deliver. I'd suggest settlement only for those who can never pay credit card debt and whose credit rating is already poor.
7:51 a.m.January 24
I want to write a post sometime on debt settlement. I know two people who went through it, one turned out good, one not so good. Lots of scams, some actual help. You only have to sell a little of your soul to get it, not quite as much as bankruptcy.
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