Sometimes you just have to admit it. You are in way over your head. Don’t worry; it becomes easier to admit that you have a credit card problem once you realize that nearly everyone around you is carrying a balance of more than $3,956.

Yeah, those people you see at the mall, window shopping in the Salvatorre Ferragamo shops and A&F stores really shouldn’t even be in there.

They have their share of debt. And so do you. And so do I. Actually, I have debt enough for three people. To say that I was drowning, is kind of an understatement.

What to do?

Consolidate

This is the one least likely to affect your credit score in a negative way. Services such as careonecredit offer a service wherein they contact all your creditors to ask them for lower rates on your revolving balances and also to see if they are willing to cancel any late fees (if any). The service I enrolled with cost around 35 dollars a month.

Pro: the payments to ALL creditors under the plan are paid automatically and because of the negotiated lower APR’s, the minimum payments become much less.

Con: you will have to pay every single cent back.

Settlement

This option will definitely affect your credit score negatively. These companies will call your creditors and try to settle your debt into one lump sum that is much less than what you actually owe. It is not unheard of to pay up to 35-40% less than your actual balance.

Pro: you will end up paying only a fraction of what you owe.

Con: because the settlement companies will wait many months to collect all the funds from you (lump sum) before paying your creditors, it will show in your credit history that you are several months past due with all the creditors. You might even still get collection calls from your creditors the whole time. This is why your credit score will suffer. The longer to collect the lump sum, the bigger the ding on your score.

Bankruptcy

This is as bad as it gets.

Pro: …?

Con: this stays on your record forever (like seven to ten years). And we all know what landlords and banks and even prospective employers think about a mark like this on your record.

These are the major moves I can think of that you can do to save yourself from drowning if the debt burden has become too much.

Hopefully, you will not have to do any of them but if you do please share your experiences with particular companies helping people with credit problems. Good and bad experiences are welcome.

Are there any Pros to bankruptcy? Are they big enough to cancel the Cons?

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