Some of the links on this page may contain affiliate links and we may receive compensation if a purchase is made - at no cost to you. Please read our disclosure for more info.
Last Updated on
When debt gets out of control and causes a consumer financial distress, most consumers don’t want to look for help to get back on the right financial path. As one of the most taboo subjects in our culture according to a CreditCards.com survey, the majority of us don’t want to ask anyone for financial help even when the financial hardship has reached a point where it’s impossible for us to deal with it on our own. Still, there are ways to handle debt on your own that can allow you to get back on the right path on your own, so how do you know when you really need debt help?
Whether you can handle debt on your own or not is largely determined by three things:
- How much unsecured credit debt do you currently owe?
- How much available cash flow do you have in your budget?
- What is your credit rating?
If you have a reasonable amount of cash flow available each month in relation to the amount of debt you need to eliminate, you may be able to implement a debt reduction strategy in order to get the debt under control. By making extra payments on one credit card at a time or paying more than the amount due on your bill, you can reduce credit card debt faster and save money in the process. With each credit card debt you eliminate, you free up that much more money to pay off the next debt, and so on until you have regained financial control.
If you don’t have a significant amount of cash flow available in your budget or your debt is too high to pay off in a reasonable amount of time, you may still be able to eliminate the debt problem on your own if you have excellent credit scores. If you have strong credit, you can qualify for the low interest rates and competitive terms needed to make do-it-yourself debt solutions work. This involves using a credit card balance transfer or unsecured debt consolidation loan to consolidate your debts into one low monthly payment. The debts are combined into one payment on a payment schedule that’s more manageable for your monthly budget. In addition, because the interest rate on the debt is so much lower, you can often get out of debt faster even as you pay less each month since the debt doesn’t grow as fast with interest added.
However, these debt solutions only work if you have excellent credit scores so you can qualify for the best rates. Otherwise, if you have fair credit scores or even bad credit scores, you may not get approved for your debt solution at all or you may get approved at terms that won’t provide the relief you need. In fact, if you take out a debt consolidation loan or execute a balance transfer with low credit, you can actually make your financial hardship worse.
In this case, you need to seek help. You can still consolidate your debt to get the same relief you would with do-it-yourself debt consolidation options, but you go through a credit counseling agency so your credit scores are not a factor for qualification. Contact a nonprofit credit counseling agency such as www.consolidatedcredit.org to see if you qualify for debt consolidation through a debt management program. As long as you have some means to make the reduced payment each month, you can usually qualify for the program.