How to Cope with Credit Card Debt you Can No Longer Pay Down

Discussions regarding debt management are generally one of the most taboo subject matters out there. Thanks to modern media, one can barely watch a basic television show without being reminded that you or someone you know has too much debt thanks to a "credit card consolidation loan" or a debt management firm looking to charge you $100/month for simply reminding you to pay your bills on time.

Thankfully, these advertisements have decreased in frequency due to the 2007 mortgage crisis because the average American consumer is nearly tapped out of accessible savings and home equity. There in lies the fundamental problem.

So what do you do when you can't afford to pay the debts you currently have? Worse yet, what can you do to save yourself from financial ruin?

Depending upon the level of severity, debt relief can be fairly quick or very painful. Here are a few good tips to consider:

1. If you own a home that contains a significant amount of equity, a Home Equity Line of Credit or a Home Equity Loan could be for you. It may be difficult to obtain a loan in current market conditions, but if you have a steady source of income and good credit, I'm fairly certain you can find a loan to cover your debts.
2. Give your credit card company a call. They are not the enemy in this case, and will give you a surprising amount of help in repaying your debts. Some consumers might even get a lower interest rate depending upon the credit card issuer.
3. Consider contacting a professional credit counselor. These individuals are professionals, who know the specific loopholes for creative repayment tactics, so their opinion could be helpful. As a precaution, try to select a non-profit counseling agency and just hang up the phone if they pressure you for a fee based counseling program. These companies can be as much of the problem, as a solution, so if you saw their advertisement on a TV advertisement, just know that they had to pay for that ad with some type of corporate funding (i.e. by making a profit from customers).

All of these are acceptable methods, but for those of you looking for a creative solution might benefit from one of my own credit card tactics by switching to a new Zero Interest credit card. If you still have a good credit rating, its likely this should not be a problem. These Zero Interest cards are essentially a free loan, which means you receive full credit for every dollar you pay the credit card issuer.

For example, if you have a 15% interest rate, you are only getting credit for $0.85 on each dollar. Doesn't sound like much, but for every $1000 dollars you owe, you would essentially be flushing $150 of that money down the toilet.

If you manage to get your head above water by clawing your way out of debt, start changing your spending habits and eliminating some of the credit cards that got you into trouble. Cutting up your card is not enough, because that card is still active and appears on your credit report. Make sure you call the credit card issuer to cancel your account, ask for written confirmation via snail mail, and when it arrives photocopy the letter and mail it to the three major credit bureaus. Otherwise, it could still be listed on your credit report 10 years later when you try buying a home.