You may be able to reduce your debt on your own if:
Through the Snowball Method, you go after the credit card with the smallest balance first, while paying the minimum on the other credit cards. This way, you retire one card at a time. The Avalanche Method requires you to retire the credit card with the highest interest rate first.
The advantage of DIY debt reduction is that it does not hurt your credit score and it does not cost anything beyond what you owe plus interest. The disadvantage is that you may find that you are not making real progress toward your goal of freedom from debt. In that case, you can always consult with a ClearOne Certified Debt Specialist to analyze your situation and explore other options.
Debt settlement plans are often a good option for people who owe more than $10,000 in unsecured debt like credit cards. If you are struggling to make the minimum monthly payment on credit cards or are making little to no progress in paying off the principal amount of debt you owe, a debt settlement plan can help you get back on track.
When you choose a debt settlement plan with ClearOne Advantage, we do all the heavy lifting for you. Here's how it works:
Credit counseling/debt management is a form of debt consolidation that may work well for people with $5,000 to $10,000 in unsecured debt. It allows you to bundle multiple credit card debts into a single package, making a single monthly payment with lower interest rates and possibly forgiven penalty fees.
Credit counseling may have a slight negative impact on your credit score, and there are some upfront fees as well as monthly management fees to consider.
Bankruptcy should be considered a last resort for those who can see no other way to free themselves from debt. A successful bankruptcy filing creates an automatic stay that protects you from creditors for the duration of the process.
Filing is complicated, however, and working with a bankruptcy attorney is usually required and there will be fees involved. Even if your bankruptcy filing is successful and you are able to discharge some or all of your debt, the severe impact on your credit score lasts for 7-10 years.
Debt consolidation loans aim to replace your multiple, high-interest credit cards with a single, low-interest loan. This way, they consolidate your monthly payments into a single payment under more favorable terms. These loans may be suitable for people with excellent credit.
Debt consolidation loans feature payment periods of 36-60 months. The main danger of “paying off one debt with another” is that you may feel tempted to start using your paid-off credit cards again. Another danger is that, because some debt consolidation loans are secured, you risk losing assets you use as collateral for the loan if you default on your payments.
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