Many people use credit cards in Kentucky to make shopping convenient. However, statistics show that the average household owes around $15,000 in credit card debt. Consumers have some ways they can effectively manage credit card debt, but it requires a hands-on approach. In this post, the Louisville family bankruptcy attorneys at O’Bryan Law Offices explain the ways to reduce credit card debt.
Working with creditors
A consumer should try contacting their creditors and explaining their situation. It sounds intimidating, but many creditors are willing to work with debtors. They may offer a hardship programs or be willing to negotiate an affordable payment with the help of a debt settlement company.
Developing payment strategies
Minimum payments commonly make up 2% to 3% of the balance. Paying more than the minimum helps to reduce the balance faster.
One debt payment method, the debt snowball method, involves paying the smallest debts first. The debt avalanche method works in the same manner except the bigger debts get paid first. Some consumers find it easiest to pay debt when they automate payments.
Getting help with debt consolidation
Consumers with good credit may choose debt consolidation. Debt consolidation combines all debt into one payment plan. This can be done with a personal loan with a fixed rate or a balance transfer credit card.
A credit card may seem counter-effective to managing the debt, but consumers can save money if they have a long 0% interest period. Then, all credit card debt will be rolled into one monthly payment.
Bankruptcy provides a last resort for consumers to erase debt. Chapter 7 bankruptcy liquidates qualified assets, and the assigned trustee divides the funds among creditors. Certain debts like child support and taxes cannot be removed under bankruptcy, however.
A person doesn’t have to live with overwhelming debt. If they still see no way out, filing bankruptcy may be their only option left for debt relief.