What If My Credit Card Debts Are More Than I Can Pay?
Do you have more than three credit cards that carry a balance each month?
Do you find yourself using a cash advance on one credit card to make your minimum payment each month?
Do you use credit cards for basic living expenses?
If you answered yes to any of these questions, you may have a serious credit card debt problem.
At MoneyProblems.ca, we recommend a ten point plan for solving your debt and money problems. This ten point plan can be summarized as follows for your credit card debts:
When your credit card debts are out of control, and when you find yourself getting farther and farther behind each month, you have only four logical options:
| 1. | Pay them off. This will probably require you to increase your income (more overtime, a second job, etc.), and reduce your monthly expenses. Make a personal budget to determine if this is possible. If you can't realistically expect to pay your credit cards off, with interest, over the next two years, your next option is: | |
| 2. | Contact a credit counsellor about doing a debt management plan. Under a debt management plan, you pay the credit counsellor each month, and that payment is divided up amongst all of your credit cards and other debts (except for secured debts like mortgages). A typical debt management plan runs for no more than five years, so if you cannot afford to pay everything off over four years, your next option is: | |
| 3. | A consumer proposal to your creditors. In a consumer proposal, a government licensed trustee prepares the proposal, and if accepted by a majority of your creditors, you will make payments to the trustee according to the terms of the proposal. Under a proposal your creditors may not get all of their money, but they will get more than the final option: | |
| 4. | Bankruptcy. A bankruptcy wipes out most of your debts, and gives you a fresh start, but a bankruptcy also impairs your credit for seven years, and has other consequences. To discuss bankruptcy, contact a licensed bankruptcy trustee in your area. |
If you are drowning in credit card debt, our single most important advice is:
Deal with it NOW.
With each passing day your situation gets worse, so take action now, give yourself a fresh start, and get your life back.