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Credit Card Consolidation vs. Bankruptcy


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Credit Card Consolidation vs. Bankruptcy

  1. 1. ==== ====Are You Struggling To Make Your Monthly Payments? Go Here To See How You Can LowerYour Payments Up To 60% ! ====To try and save us from ourselves, the Office of the Controller has recommended that credit cardcompanies make their customers pay higher minimum payments, up to double the current amount.This will affect at least 7% who currently only pay the minimum and those who can only afford topay a small portion over the minimum.These days the average consumer has 4-6 credit cards and $8-20 thousand dollars in credit carddebt and rising. Paying only the minimum and never charging again will keep you in debt for 30-60years, depending on interest, late fees and over limit costs.The guidelines to raise the credit card minimum were made in 2003, but the banks and credit cardcompanies wanted some time to ease into it. Some say, they waited until the new bankruptcy lawswere into effect, so they would have less to lose. Theres no set date when your credit cardcompany will start increasing your minimum payments, just know they will and probably soon.Some already have. I have read dates from July to October of this year and many thought it wasgoing to happen last year, so be warned.What can you do, if you will not be able to afford this increase?You can contact your credit card companies and see if any will work out a lower payment for youon a temporary basis. Keep in mind that frequently, when you have payment arrangements likethis, they will not let you use your credit card, so keep at least one available for emergencies.You can hire a debt consolidation company to get a personal loan for you and pay off all yourcredit cards. Personal loans usually dont have very low interest rates, like a home equity loan orrefinancing your home. If you dont think it will take you too long to pay off or you dont own ahome, this may be the way to go. You can also hire these people to make payment arrangementsfor you or charge off some of your debt. Be careful here, any debt they get "charged off" for youwill show that way on your credit report, lowering your credit score dramatically, and you will haveto pay taxes on the charge off amount as income.One solution, besides trying to curb your spending, is to either get a home equity line of credit orrefinance your home. The interest rates are lower than a personal loan or credit card and spreadout farther, so you will pay a much lower monthly payment. You always have the option of payingmore than the minimum when you can afford to.If your debts are moderate, but you may need more in the future for home repairs, my suggestionwould be to go with the home equity line of credit. Get approved for a little more than your debtsand expected home repairs, so you wont have to worry about getting another one for a while. Try
  2. 2. to pay more than the minimum whenever you can without risking your cash flow.If you have a lot of credit card debt, home repairs that need to be made, an unstable job or othersituation that could make matters much worse at any time, you should probably considerrefinancing. If its been at least a year or more since you purchased or previously refinanced yourhome you probably have enough equity, depending on where you live of course. Also, if youvebeen making your payments on time for the past year or more, youll have a good payment historyand should have a good enough credit score to get a decent rate.If you have late payments, you still may want to consider refinancing at a higher rate, as atemporary solution. Your interest rate will probably be much less than your credit card interest, soyoull pay a lower monthly payment and not risk ruining your credit or worse, losing your house. Ifyou pay all your bills on time for the following 1½ to 2 years, you can refinance again to geta better rate.If you think that the rise in credit card minimum payments will affect you adversely, try to make adecision on what you are going to do about it soon. The longer you put it off, the harder it will be todeal with in the future.Sandra Wellman is the web master of where you can read manyarticles with helpful tips to refinance your home loan. There are books, ebooks and otherresources available on many other finance topics as well.Article Source: ====Are You Struggling To Make Your Monthly Payments? Go Here To See How You Can LowerYour Payments Up To 60% ! ====