Almost everyone has a credit card these days, and if you are like most people, you carry a balance on your credit cards from month to month. Yes, you know you are paying interest on the outstanding balance and sometimes that interest rate is ludicrous, but in the meantime, you have been able to use your credit cards to purchase things that will make you life easier or happier, or to give you that reward you deserve.
There is no problem with that and most people handle their credit cards exactly that way. But the real problem comes along when you start using those credit cards and personal loans to a greater extent than you should. Sometimes, despite due to an unexpected high but necessary expense like a medical expense or a job layoff, your financial house of cards is in danger of a major tumble.
In this situation, many people think of bankruptcy as their best or only way out, which is typically the farthest thing from the truth one can imagine. Bankruptcy has a specific purpose, and especially with the new bankruptcy laws, it is not as easy as it once was, and you may not even be allowed to file bankruptcy. Beside, bankruptcy is far from your only or best option, especially when you consider the long term negative effects, topmost of which is the fact that bankruptcy will stick out like a sore thumb on your credit report for the next 7 or more years, and probably long after you've gotten your financial act back together.
One of your most viable and likely options is credit card debt consolidation. You can find free or very low cost credit card debt consolidation services at many companies, some of what even have a dedicated staff that will work with you to explain to you how it works and how things happen. Understanding how credit card debt consolidation works and what it can do for you can save you a lot of time and money in chasing solutions that are really not a solution.
The interest rate charged by credit card debt consolidation company may not be the lowest in the world, but it is almost certainly better than what your credit card issuers were charging. Also note that you are only paying a single interest rate on your debt consolidation loan instead of multiple different credit card interest rates.
Have you eliminated the debt? No. But with a credit card debt consolidation loan, you have accomplished several positive things. First of all, your single monthly payment on the debt consolidation loan is going to be less, perhaps even far less than the sum total of what you were paying on all your credit cards. This should hopefully give you the financial breathing room you need to get back on track.
Secondly, it does not tarnish your credit history or your credit score like a bankruptcy would, or as credit card charge-offs would. As far as the credit card companies are concerned, you are making payments on time with the minimum payment due or more, and they are happily reporting you as current and on time to the credit bureaus.
The big danger here is that since you are no longer behind the eight ball financially, there may be a risk that you will go out again and get yourself in financial trouble the same way you did the first time. Hopefully this will not happen and you will have learned some valuable lessons in this whole process, but being aware that this temptation may exist should help you avoid and resist the temptation while you financially get yourself back together.