Credit Card Debt Consolidation for Bad Credit | McCarthy Law
September 5, 2016

Credit Card Debt Consolidation for Bad Credit

Do you have debt and bad credit that is spiraling out of control?  Are you being harassed by debt collectors? Living with mounting debt and bad credit can be an overwhelming and paralyzing situation.  In order to make ends meet, you might’ve maxed out several credit cards, and are now in a position where you can’t make the minimum payments.  As your bills are mounting, your credit is conversely tanking. If this sounds familiar, or you are headed down this path, there is help.

Debt Consolidation Loans

The first strategic step towards bettering your financial health is to take an honest (and often painful) look at where you stand.  The biggest problem with credit card debt is that if you are only making minimum payments, you are only paying the high interest rates on the cards, and you aren’t making real progress towards paying off your balance.  If you were to calculate how long it will take you to pay off your debt using an online debt calculator, you may be shocked to discover that it could potentially take decades to pay off and rebuild your current bad credit.  A debt consolidation loan pulls all your debt into one loan, thereby simplifying what you need to pay each month.

What If You Have Bad Credit?

If you have bad credit, you may find it difficult to qualify for conventional debt consolidation from lenders. If you’ve been paying late, or missing payments altogether, you may be considered a risk because of your bad credit.  Obtaining an unsecured personal loan will be difficult at best, and likely come with another high interest rate.   However, in recent years peer-to-peer (P2P) lending opportunities have increased, which bypasses the banking loan system and allows regular people to organize loans between one another, usually through a website.  This can be a great option for people with bad credit and limited options.

Alternatives to Debt Consolidation Loans for People with Bad Credit

While consolidation programs are a common way to deal with bad credit and debt, there are alternatives that might be a better fit for your situation.  These include:

Debt Management Plans- A Debt Management Plan (DMP) offers consolidation services that may help you pay down your debt with in a 5-year time period. You may benefit from a lower interest rate than you are currently paying, which equals savings for you every month.

Debt Settlement-This is an attractive alternative to bankruptcy for those who are trying to pay back a least a portion of their debt, but cannot afford the Debt Management Plan (DMP) payment.  In this instance, you make monthly deposits to a settlement account in an amount you can afford.  You don’t make payments directly to creditors, but your provider works to negotiate terms with your creditors for a less-than-full repayment.

Be Aware of Credit Card Scams

It’s unfortunate, that those who need the most help with managing debt, can fall victim to scammer looking to prey on this vulnerability. Sadly, people with bad credit are often looking for a quick fix. Usually the first interaction someone receives with a credit card relief scam is through an automated call, in which the company will tout their claims to help alleviate or eliminate your debt.  The temptation to believe some of their claims can be great.  But the best bet is to hold off, or just hang up.  When pressure mounts to act now, act fast, or don’t delay, you should do exactly the opposite of what they are asking, and stop.  These are red flags of a credit card relief scam and you should hang up.

Why Hiring a Debt Attorney Can Help You Consolidate Your Credit Card Debt

While you are able to settle debts on your own, you may feel that you need the assistance of a licensed attorney to help negotiate or settle your debt and help you turn your bad credit around. After analyzing your situation, a debt attorney can provide you with the legal advice you need (something a debt consolidation company cannot do).  A debt attorney will go over all of your options and advise you accordingly. Working closely with an attorney helps ensure that you won’t fall into the wrong hands or become a victim of fraud.  We’re here to help you discover what your options are.  Please give us a call at 855-976-5777.

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