There are several possible solutions to your credit card debt. Which solution you choose will depend on your situation and how thorough you research the possibilities. Options include loans, debt settlement, debt management, and bankruptcy.

One possibility you might have considered when seeking help with paying your credit card debt is some type of loan. There are two types of loans that could be used: a home equity loan or a debt consolidation loan. Home equity loans are taken against the equity of your home. Because your house is used as collateral, you will be able to get a better interest rate. This is also risky, because now you could lose your home if you default on the loan. A debt consolidation loan does not require you to have a home, and it will usually carry a higher interest rate. Both types of loans require good credit scores to even qualify, let alone get good rates. Also, it is rarely a good idea to get new debt to pay off other types of debt.

Debt settlement is a much different option. Debt settlement can sound very appealing because settlement companies will promise to get you a great reduction of your debt. They will also charge you large fees which include a monthly fee until you are able to pay the settlement amount in full. Once you have gone through with it, you will have to pay taxes on the amount of forgiven debt. Often, fees and taxes will make up for any gain you received by settling your debt. On top of that, your credit score will likely suffer because of debt settlement.

Unlike a loan, a debt management plan allows you to keep your debt with your original creditors. Unlike debt settlement, a debt management plan provides you with the opportunity to pay off your debt in full, therefore not having to pay additional taxes. The way a debt management plan works is that the debt management company works with your creditors to reduce the interest and fees that you owe. More of your monthly payment will be going towards paying off your debt. You will pay one monthly payment to the debt management company who will then distribute your money in a way that will benefit you. You will be able to watch your balances diminish as you diligently make your payments. This will provide you with the accountability and support you need to pay off that pesky credit card debt.

A final option for credit card debt is bankruptcy. This option is not for everyone as only the most severe situations qualify. Also, a bankruptcy will remain on your credit score for 7 years, disqualifying you in many cases from future purchases on credit. If you think that bankruptcy is your only option, consider talking to a credit counselor before you talk to an attorney to see if there might be a better way to work on your credit card debt.

If these options leave you confused or overwhelmed, talk to an accredited credit counselor. They can walk you through these possibilities and make recommendations based on your situation. Being informed will help you make the best decision.