Facing Your Credit Card Debt

According to a recent article in NerdWallet.com, dealing with credit card debt can be a frustrating and difficult experience. However, it is possible to put an end to that debt without filing for bankruptcy. While Chapter 7 bankruptcy protection can really help debtors in the Chicago area who do not have other options for debt relief, there may be other ways to put a dent in your debt, so to speak, without damaging your credit rating. The NerdWallet.com article discusses numerous ways in which the average consumer with a substantial amount of credit card debt might be able to begin lowering that debt in a meaningful way.
Acknowledge That You are Not on Track to Pay Off Your Debts
One of the first steps, the article suggests, in getting back on track with your debt is acknowledging that you are not earning enough to pay off what you have charged on credit in a timely manner. Debtors often get themselves into states of denial by thinking that it makes sense to make minimum payments on credit cards because eventually they will be earning sufficient wages to simply pay off the balance. In a majority of cases, however, this simply will not happen.
What can you do? As the article emphasizes, “take stock of expenses and find ways to cut costs.” Simply making a spreadsheet with your weekly or monthly expenses, as well as a categorized list of every purchase you make, can help you to recognize areas in which you may be spending unnecessarily. If you can cut back on what you spend each month, you can use that extra money to pay down your credit card debt.
Do Not Max Out Your Credit Cards
One of the most telling signs that you are living beyond your means is when you are “bumping up against your credit limit,” the article reports. Many Chicagoans apply for credit cards initially in case of an emergency, but then they end up spending. When the credit company increases your limit, that can be a dangerous increase—it can allow you to spend even more than you have.
There are reasons beyond simply getting into further debt that you should not max out your credit cards. When you apply for credit, one of the factors that goes into calculating your credit score is your “credit utilization.” If you are using a high percentage of the credit you have—in other words, even if you have very high credit limits but have charged nearly up to those limits—your credit score can take a substantial hit.
To manage your credit situation, set a goal to only charge what you can pay off by the end of the month, or think about the benefits of a 0% APR balance transfer. Although a balance transfer likely will cost you a small fee, it may be worth it in the long run if it allows you to pay off your debt without continuing to incur significant interest.
Contact a Chicago Consumer Protection Lawyer
Managing debt can induce anxiety in many of us, but an experienced Chicago consumer protection attorney can help you to decide whether personal bankruptcy is the best option for getting back on track. Contact the Emerson Law Firm today to learn more about how we can help you.
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