Image result for credit and debtDealing with debt is never a fun topic to think about, but it's important to seek credit card debt solutions as soon as you can to get everything paid off; especially if you have a limited amount of money coming in and a pile of debt that needs to be repaid. 


Whether you have a few accounts in collection already, have credit card payments in default or seem to have too many accounts open with not enough money to pay, several types of debt solutions exist. With each option, however, lie both advantages and disadvantages to getting your debt gone. 

1 - Debt Consolidation


One of the first credit card debt solutions is to consolidate your credit card accounts into one, single line of credit. This can really only be done if you have multiple credit card accounts that are still active, that is, have not been sent to collections or written off as bad debt. 
 

The first option with debt consolidation is to open a new credit card account with a different creditor. Many credit cards allow you to transfer amounts from other credit cards and offer introductory interest rates for a specified period of time. You can transfer the other credit card amounts to this new credit card, thus enabling yourself to make only one monthly payment. In addition, if you can pay it off completely during the introductory rate period then you've saved the interest you would have paid to your other credit card accounts. 


A debt solutions consolidation plan can also take the form of a home loan or mortgage. You can borrow money against your house, receive the cash and use it to pay off your credit cards. The big advantage with this plan is that mortgage rates are generally lower than credit card interest rates, allowing you to make a single payment each month at the lower rate. 

2 - Debt Management Plan


A debt management plan (DMP) is one of the popular credit card debt solutions that involve a third-party, a credit counseling service or agency. The credit counseling agency can enroll you in the DMP, which then requires you to make a single payment to the credit counselor. The counseling agency, then, distributes the money you send to the creditors. 


A couple advantages of using this as one of your debt solutions is that the credit counseling agency may be able to work on your behalf, lowering creditors' interest rates and payments. Though a DMP is often misunderstood and thought to negatively impact your credit score, Fair Isaac (FICO) has stated that working with a credit counseling service should not lower your score. However, your creditors may report that your account with them is included with the managed payment plan. 

3 - Debt Settlement


Settling your credit card accounts is another of the debt solutions that also has both positives and negatives. With debt settlements, most of the times your account has already been turned over to a collections agency and the agency has contacted you about your debt. The collection agency will typically offer to settle your debt at a lower amount. Many times this amount is 50% or more below what you actually owe. 
While debt settlement seems attractive, these credit card debt solutions can have a negative impact on your credit score. Your creditor, or the collection agency, will report that you "settled" the account and your credit score will tumble if it hasn't already. This option can often be just as severe as a bankruptcy marked on your credit report. However, the main advantage with this option is that you do save money and are officially cleared of the debt, which can mean that you can start to rebuild your credit standing immediately. 

4 - Bankruptcy


The effects of bankruptcy are long-lasting, which is why this is the last of the credit card debt solutions you should consider. Besides staying on your credit report for 7 to 10 years, in most cases, future creditors may not be as affable to the idea of loaning money to you. On the other hand, bankruptcy does discharge all of your credit card debts, which basically gives you a clean slate to work with as far as making payments on time to future creditors. 


As you can see, there are many debt solutions you may want to consider if you're in over your head with credit card accounts. Virtually any option is better than defaulting on your credit card accounts or doing nothing when collection agencies contact you about your debt. However, you must review each of the debt solutions and options carefully to make sure you're making the best choice for your credit particular situation.