Are you facing the same problem? What have you done to overcome your financial hardship? I am sure you are indeed stressful and depressed when you don’t have enough fund to pay off your debt. You may not have idea to take any action since you don’t have cash on hand.

Seriously speaking, doing nothing is not the right step. Failure to make the minimum payment to your credit cards is in fact a DANGER to your credit score. At the same time, the card providers have the right to take legal action on you. Besides, the lenders can also sell your accounts to the debt collection agencies.

You don’t need to face all the above mentioned consequences if you take proactive steps to overcome the problem. Let me share with you some possible solutions:

1. Taking up a personal loan

In order to protect your credit rating, taking up personal loan is the best solution. You can either choose to get friendly loan from someone you know or you can refer to your credit union for financial assistance. Since the interest rates for credit cards are usually high, it will be good if you can obtain personal loan which offers lower interest rate. This will help to reduce your total financial cost and at the same time, you can stop all the debt collection calls.

2. Consolidating your debts into one single loan

Besides looking for personal loan, you can also consolidate your multiple debts into one single loan. The concept of obtaining debt consolidation loan is just the same as getting normal personal loan. You need to look for the licensed debt consolidation loan providers in the market and select the best deal. Once you have cleared off your credit card debt with the loan, you are reminded to stop swiping the cards because you need to focus on paying back the new loan on time.

3. Negotiating with your creditors to reduce your total debt

For those unemployed card holders, getting a loan might be hard. Don’t worry, you can try other solutions. When you can’t make the payment, don’t feel ashamed to inform your creditors about the financial difficulties you are facing. You are advised to send in the settlement letter to request for debt reduction. You are reminded to evaluate your financial position carefully and offer a settlement amount which you can afford to pay. In general, most of the card providers are willing to accept debt settlement after assessing the debtors’ financial situation.

To sum up, you must take fast action in solving your credit card issues before it is too late. It is not worth for you to face the music as there are many opportunities you can make use of to change the situation.

Here are some alternatives for your kind reference:

Alternative 1: Look for friendly loan

When you are facing financial difficulties and it is hard for you to apply for secured personal loan or debt consolidation loan, looking for friendly loan from family members, relatives, friends or current employer is recommended. You can gather the fund from them and pay them back in future with or without interest. You can save your time and effort to apply loan from financial institutions.

Alternative 2: Negotiate with your creditors to reduce partial of your debt

If there is no friendly loan available, don’t feel upset. You can negotiate with your lenders to reduce your total debt. Contact your creditors or write in to them to request for help. Inform them about your current financial position and prove to them that you can only pay back partial of your total outstanding balance. You are advised to offer them a reasonable settlement amount or propose a lower interest rate to them.

By doing so, you are able to reduce some financial burden and make your debt more “affordable”. If you have no confidence to handle the debt issue on your own, you are advised to look for a reliable debt settlement company to assist you. The professional will be able to deal with your creditors on your behalf.

Alternative 3: Look for government approved credit card debt counseling agency

If your credit card debt is unbearable and the amount is too large for you to handle on your own, you may want to declare bankruptcy. Before you take such action, you are advised to look for government approved credit card debt counseling agency for help. The representative will advise and assist you to set up a plan which suits your situation. You are reminded not to file bankruptcy before consulting anyone.

Alternative 4: Work out your own payback plan with your personal stimulus package

If you don’t wish to affect your credit rating at all, I would strongly suggest you to create your own economic stimulus package to raise cash for your debt. Be a smart tax payer. Make use of your tax refund to pay partial of your debt. At the same time, sell off things that are valuable so that you can eliminate your debt first.

Besides, look for part time job to increase your monthly income. Take the initiative to work out a realistic budget and find as many ways as possible to raise cash to clear off your debt.

When you don’t own any fixed asset, don’t worry and don’t try to avoid yourself from your creditors. Even if you fall behind on payment, you still stand a very high chance to get rid of your credit card debt by choosing one of the alternatives stated above. Just one thing you need to bear in mind. You must evaluate your financial requirements first before making up your mind on the financial option.

Even when the debt collection agencies call up the debtors, they also request the debtors to clear off their debt as soon as possible in full amount. However, in reality, especially since economy crisis in 2008, it seems that most of the debts are entirely negotiable.

In order to write off partial of your debts, you are advised to apply the most economical way, i.e. writing a debt settlement proposal to your creditors on your own. In order to reduce your financial burden successfully, here are some useful tips I would like to share with you.

# Tip 1: Get the right timing to submit your debt elimination proposal

You can’t simply submit your settlement proposal at anytime because if you do it at the wrong timing, your request will be rejected. The best time for you to propose settlement offer is when your past due is over 3 months but less than 6 months. This is the best time to convince the creditors to accept your proposal.

If you write in too early, say less than 3 months, the creditors do not really trust that you don’t have the ability to pay back. They may think that you have intention to take advantage from them. Hence, in order to have a favorable settlement, make sure your debt is at least 90-day old.

# Tip 2: Put your request in writing in a systematic way

Before you start writing your settlement letter, you are reminded to plan your content carefully. You need to provide your personal information and your account details in the first paragraph. Then you need to inform your creditors about the hardships you are facing in a brief manner. After that, start proposing your debt settlement plan and finally, request your creditors to remove all the negative items from your credit file.

# Tip 3: Be extra careful in conveying your messages

When you put your points in black and white, the letter serves as strong evidence. It proves that you have intention to settle your debts. Hence, you need to make sure that you have the ability to pay accordingly, i.e. pay according to your proposed settlement amount. If you don’t have sufficient fund, you MUSTN’T write the letter because you will be required to bear legal obligation with the written proposal.

# Tip 4: Show your commitment and sincerity in your proposal

In order to convince your creditors to accept your proposal, you need to show your sincerity in paying off your debt. Write a specific date which you can settle your debt if agreement is obtained from your creditors. Besides, let the creditors know how much you have on hand. Inform them your financial “limitation”.

When you have accumulated a big sum of outstanding balances in your credit card accounts and you know you have lost your financial ability to pay back, don’t feel ashamed to communicate with your creditors. You should take the positive approach to solve your problem.

Let them know your financial difficulties through letters and obtain their approval to write off your credit card debt. The whole process may involve a few negotiation letters. Don’t expect to overcome your debt issues with just one letter. Hence, you need to “sharpen” your writing skill to achieve good result.

These service providers provide information to attract potential clients to sign up their debt relief plans. However, sometimes, there are unethical companies which provide “misleading” statements to the public.

As a smart consumer, it is indeed necessary for you to differentiate the common myths and the real facts. Don’t be trapped by empty promises and guarantees.

Myth No. 1: Every debtor is able to reduce his or her outstanding balances as much as 50% of the total debt

As a smart consumer, you should use your common sense. Do you think the banks or the credit card providers are willing to accept your settlement proposal? The debt amount forgiven is not reasonable and it is unfair to the creditors too. In general, getting 30% of your total debt forgiven is considered acceptable. Most of the creditors are more than happy to accept this offer. In certain circumstances, some creditors refuse to cut down the total debt. They prefer to reduce the interest rates or waive the annual fees.

Myth No. 2: All the debt settlement companies are reliable

There are many service providers which are in operation actively but not all of them can be trusted. There are scams which the consumers should avoid. Many companies are taking advantage to gain profit from their clients. They make money from the total debt forgiven by the creditors.

Some service providers even charge upfront payment to their clients. In some situations, the service providers even make use of the personal information of their clients for unlawful purpose. For your information, it is indeed unsecured to deposit the money into the settlement companies’ accounts as it is not insured by the Federal Deposit Insurance Corporation.

Bear in mind that these service providers are not banks. They can run away with your money without paying your creditors. Hence, it is always safer for you to handle your credit card debt on your own.

Myth No. 3: The debtors’ credit score is well protected

Many service providers normally tell their clients that their settlement plans do not affect the debtors’ credit score. However, in the real scenario, they don’t really take care of their clients’ credit rating. You need to accept the fact that any missed payment or late payment will definitely cause adverse effect on the debtors’ credit file. If the company you approach provides you guarantee, it is usually scams.

Myth No. 4: All creditors accept debt settlement offer

For your information, it is not compulsory for the creditors or lenders to accept settlement proposals because they have no legal obligation to do so. They can say No to you anytime.