Managing Debt
To just pay off the debt
• Decide how much you can pay each month on credit card debt.
• Send the most to the card charging the most interest.
• When that card is paid off, send money that would once have gone to that card to the
on charging the next highest interest. Continue that pattern until every credit card is
paid in full.
Sign up for a debt management program through Consumer Credit Counseling
Service
• This is not actually consolidating debt but it feels like it because clients make only
one payment a month to the agency then the agency disburses the money to all
creditors.
• Some creditors will lower finance charges. Most will stop late payment and over-the-
limit fees after a short period.
• A debt management program is an excellent way to pay down debt in a short period
of time without putting your house on the line.
Transfer balances to 0% credit cards
• Be sure to read the fine print. Sometimes the transfer fee is more than you are
currently paying in interest.
• This plan works only you have good credit and your credit cards aren’t at their limits.
• Cancel the original credit card. Statistics say if you don’t that within two years you will
owe on both cards.
• DO NOT charge on the card you have transferred the balance to. The 0% usually
applies only to the transferred balance and all payments will be applied to that
balance first. Meanwhile your purchase balance will accrue interest.
Refinance your home
• Should be done only if you are also lowering your interest rate.
• Beware of any lender who talks only “payment” instead of “interest rate.”
• Be aware you trading unsecured debt for secured. If you can’t keep up the
payments, you will lose your home.
Second Mortgage
• Same restrictions as refinancing your home. You may still lose your home if you
cannot keep up with the payments
• Line of Credit
• Again putting your home at risk of foreclosure if you cannot pay.
• Interest rates are usually variable. Right now they are very low but if rates go up so
will your payment.
• These usually require interest only payments for a certain period of time but then the
bank may want payment in full.
• May be a good idea if you are planning to move within 10 years – especially if you
need home repairs.
www.cccservices.com 1-800-355-2227