Credit card debt is a huge problem today. There are a few things that contribute to this issue. Some people, of course, overspend. They use all of their available credit on things they want but don’t necessarily need and when the bills are due, they don’t have enough money to pay for the things they purchased. Although this does happen, it doesn’t represent the majority of people who have debt problems. Far more people get into deep debt due to job loss or illness. When they can’t make the minimum payments on their credit cards, late fees get added and the debt grows. Fortunately, there are some options.
By consolidating multiple credit cards into a single loan, a person who is drowning in debt can save money and also restore their credit rating. Instead of making multiple payments every month to different companies, a person with a consolidation loan from a company like Blue Trust Loans will only need to make one payment. The lender pays off all of the credit cards and rolls the balances into one loan. As long as the borrower doesn’t use their credit cards for new purchases, they will only have to make a single payment on their debt every month.
In some cases, a creditor might be willing to settle for less than the full credit card balance. Customers can do this on their own or with the help of a company that specializes in debt settlement. In most cases, the credit card company will close the account after agreeing to the settlement. The customer may also have to report the settlement to the IRS when they file their taxes at the end of the year. Large settlements may be treated like income and result in a higher tax bill for the customer.
It’s important for anyone who uses either debt consolidation or debt settlement to carefully evaluate their spending habits and budget to prevent this problem from recurring in the future. While there are options to help people get out of debt, they aren’t free. Although consolidation loans have fees and interest, they may be able to help a diligent customer get back on their feet.