Equifax, a leading credit data repository, reports credit card debt defaults of 60 days or more rose in November to 4.62 % compared to last year’s 3.76%. The good news is that Novembers delinquency levels are lower than May’s high of 4.79 %. Meanwhile, credit card issuers are holding a tight rein on issuing new accounts; new bank card accounts are down by about 46 % over last year, and most of the new accounts were opened by consumers with excellent credit. Consumers, concerned with ongoing economic woes and fed up with rising rates and reduced credit lines, are paying down credit card balances.

In too Deep? Debt Consolidation and Credit Counseling Offer Hope

If you’re struggling with thousands of dollars in credit card debt, help is available. Debt consolidation and credit counseling plans through professional credit counseling services can help you regain financial solvency and live on a cash-based budget. Rather than spending money you don’t have, committing to getting out of debt is one of the best things you can do for yourself in the new year. Here’s some basic information about how credit counseling and debt consolidation programs work:

 Credit Card Debt Solutions: Your Debt Consolidation Plan

The first part of credit counseling and debt consolidation requires an evaluation of your income and how much you owe. Certified credit counselors can assist in designing a new budget that includes making affordable payments to your debt consolidation plan. Your credit counselor contacts your creditors and negotiates repayment terms based on what you can afford to pay. Counselors may also negotiate a reduction or waiver of fees and finance charges, but typically do not negotiate reductions of credit card balances. You’ll sign an agreement specifying repayment terms and due dates. Your agreement will also include terms and conditions that include closing your credit card accounts; this is required by the credit card issuers, who want to ensure that you won’t incur more debt while repaying what you owe them. You’ll agree to make a lump some payment periodically (weekly, monthly, or semi-monthly) to your credit counseling agency; after deducting their service fee remaining funds are distributed to creditors according to your plan.

Debt Consolidation and Financial Recovery: Avoiding Slippery Slopes

Although closing your credit card accounts may seem inconvenient, it’s important to focus on the benefits of getting out of debt. Sticking to your cash-based budget is essential to re-establishing financial security. Don’t be tempted to go over-budget on things you don’t need. This is how credit card debt gets started; managing spending according to your budget is a discipline that can seem tough in the short term, but the day you complete your debt consolidation plan and become debt free will be well worth any “retail sacrifices” you’ve made.

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