Expert: David McArthur - 1/28/2009

Question
Hi David,  I have 2 Credit Cards that are Maxed Out.  Each one is carrying a balance of 5,000 dollars, and I also have a loan for 10 thousand.  I can only afford to make the minimum payments on my cards and I don't see any way out of this.  What are my options?  I always hear and see on tv and radio about Settling Debts at a Fraction of the Balance.  Is this True?  Can this be done?  and how would I go about doing this?

I want to cancel my cards and get the debt settled for a fraction of the price, but I'm not sure if this can be done.

Thanks for your time.  Dan.

Answer
You have three options.

1. Credit Consolidation.  that's the stuff you see on TV.
2. Bankruptcy.

Both of these are very damaging to you credit.  Many of my credit repair clients come to me after they have done one of these services.

3. Create a plan that will buy you out of debt over time.  It is not easy, but is usually possible.  You may need to speak to someone that specializes in budgets or cash flow management.  If you can not pay it off within 3 years you may want to consider option 1 or 2.