Credit Card Debt Help

Americans are carrying a lot of credit card debt, and that can sometimes lead to financial stress, payment problems, and bankruptcies.  In this publication, we're going to discuss some of the options individuals have when it comes to managing their credit card debt.  Options we'll discuss include:  credit repair services, self help, and even budgets.  These are all part of a do-it-yourself debt control process.

Controlling Credit Card Debt

Financial troubles begin when spending increases and / or household income goes down.  Loss of a job, or spending beyond your means, can send credit card debt out of control.  A glance at your credit card statement may have you wondering how you're going to repay the balance owed.  Many individuals need help with their credit card debt, and they're not always sure where to turn.

Credit Repair Services

You've heard or read about companies that offer credit repair services, but you're just not sure if those claims can be true.  Well, we're going to offer some guidance that you might want to consider before seeking help elsewhere.  With the sheer volume of credit card debt held in the United States, there are a lot of clever people trying to make some money off of the misfortunes of others.  That's an unfortunate fact of our society.

The changes to bankruptcy law make it even more difficult to walk away from your credit card woes.  Fortunately, you've taken a big step in recognizing that you need some help managing your money or monthly expenses.

The good news is that the single most important source of help is someone you look at in the mirror every day.  You're probably in the best position to help yourself by managing your credit card spending wisely, and paying closer attention to your personal finances.

Do It Yourself Credit Card Help

The method we're going to suggest here is a two step process.  We're not telling you that you can't seek the help of others.  We're simply suggesting a method that might work for some individuals.  This could be termed a self-help way out of credit card debt.  You may very well decide that this process won't work in your situation.  If that's the case, we have several other resources that can help you find a credit card debt counselor or a non-profit debt organization that can provide you with more guidance and / or financial education.

Our method addresses two large obstacles you might be faced with:  the credit card debt itself, and the possible need for credit repair.

Eliminating Credit Card Debt

Short of bankruptcy, there is simply no way to reduce your credit card debt without abiding by this simple equation:

Money Charged to Credit Cards < Money Flowing to Credit Card Companies

Now this might sound obvious, but many individuals don't follow this rule, and quickly find themselves overwhelmed by debt.  The objective here is to figure out how to make payments to the credit card companies that are greater than your credit card charges.  One suggestion is this:  Run your personal finances like a business.

Essential versus Discretionary Charges

You need to be your own chief financial officer, and run your home like a business.  You need to make prudent purchase decisions, and completely understand the long term implications of each decision.  You need to be able to separate the purchases that are essential to the smooth operation of your household from those that are unnecessary, wasteful, or extravagant.

To get a good view of their business operations, most financial officers rely on a series of reports or financial statements that provide them with insights into the fiscal health of their businesses.  As an individual that is trying to figure out where all the money goes each month, you need to arm yourself with the same types of tools.  The most important of which is a household budget.

Managing Debt with Budgets

We have an entire series devoted to the topic of budgets and budgeting, so we are not going to repeat all of that information in this publication.  A household budget is essential to understanding your sources of income and expenses.  A very good budget software tool is Intuit's Quicken.

If you don't want to spend money on software, then we have a budget spreadsheet that you can download for free.  For some people, the spreadsheet is all you will ever need.  For others it is a good place to start thinking about how the home's finances can be better managed.

Credit Repair Help

The first phase of this approach is to begin getting your future credit card bills under control by not overspending.  Once they're under control, you can start to pay down the outstanding card debt you've already accumulated.  The second step that we are going to discuss has to do with the accuracy of your credit report.

Credit Repair Claims

If you've been searching for credit card help of any sort, then you're sure to encounter credit repair claims that seem too good to be true.  The truth be told, the only thing an outsider can help you with is repairing inaccuracies in the report itself.  They cannot "clean" your report, and signing documents containing false claims is illegal.

Requesting a Credit Report

By law, you're entitled to a free credit report every twelve months.  You are also entitled to a free report anytime a company takes adverse action against you.  That's the law, and it's there to protect you from an inaccurate credit history appearing on your reports.  You're also allowed to dispute inaccurate information for free.

In fact, under the Fair Credit and Reporting Act, both the credit reporting company (Experian, Equifax, TransUnion) and the organization providing the disputed information, such as a credit card company, are responsible for correcting information on the report.

Fixing Your Credit Report

Once you have a copy of your credit report, look it over carefully for inaccuracies.  If you find a problem with your credit report, then you need to get it fixed.  That means you need to write to the credit reporting agency, and possibly the company providing the inaccurate information.  When you write to these companies, you want to keep the letter short and simple.  You want to discuss the facts surrounding the problem, and you want to provide copies of any documentation proving your claim.

When writing your letter, you want to be very specific as to the exact item in dispute.  You should provide information that supports your position, and you need to ask the credit reporting company to remove or correct the item immediately.

All companies reporting information to credit agencies are required to investigate claims in a timely fashion, usually within 30 days.  They are also required to report their findings back to the credit reporting agency.

After the investigation is complete, the reporting agency must provide you with the results of their findings in writing.  In addition, at your request, the agency must also send a corrected copy of your report to anyone that was sent a copy of the report during the past six months (two years for employment purposes).

Fixing Accurate Credit Information

If you find that the information on your report is accurate, then the only way to "fix" the report is by establishing a good payment pattern and time.  Most negative information on a credit report will stay there for seven years.  In the case of a bankruptcy, the information stays on your report for ten years.

If you follow your budget, and start paying down your credit card balances, then the report will start to reflect this good behavior.  The sooner you get started down this road, the faster your credit should recover.

Dispute Letters to Credit Agencies

Finally, if you find inaccurate information on your credit report, we have a sample credit dispute letter that you can download for free.  We're providing this sample letter to help you remember the types of information you need to include, and give you a jump start on the letter itself by providing you with a template that you can borrow from.  Make sure you keep copies of everything you send to these companies in case a question about your claim comes up at a later date.

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