Coping with serious credit card debt in Maine

There are a number of ways that people with significant credit card debt can find relieve.

Credit card debt is a serious issue for many consumers in Maine. A report from the Bangor Daily News states that the average credit card debt for people in Auburn is $5,205, which is paid off on average in about 39 months.

It can be overwhelming and even frightening to see a bill with numbers that are well above a consumer's budget. Fortunately, there are some options to make payments more manageable and maintain a decent credit score.

How can I assess my debt?

Before doing anything else, consumers in debt need to take stock of what is owed. Every debt should be written down along with the interest rates on those cards. This can help determine which debt should be the priority to pay off first. For example, experts generally recommend paying down the card with the highest interest rate while making the minimum payments on others. Failing to at least make the minimum payments will lead to more money owed and a lower credit score.

How do I know where to start?

After assessing debt, cardholders should make a budget that tracks all income and all expenses. It may be necessary to trim certain areas, such as money set aside for entertainment, and instead put that money toward paying down a credit card balance. Making a budget - and sticking to it - is imperative when facing debt and trying to rebuild credit.

Can the credit card company help?

Perhaps. As soon as someone believes that the card balance is overwhelming, he or she should contact the company. In some cases, the company will agree to reducing the interest rate, which will keep the balance from growing substantially as the consumer tries to pay down the debt. It is also possible that the company will extend the deadline for a payment.

Should I use a debt settlement agency?

There is no shortage of debt settlement programs, which will work out a deal with a credit card company on the consumer's behalf. The deal typically enables the consumer to pay a lump sum that is less than what is owed, thus wiping out the entire debt.

However, as the Federal Trade Commission points out, a cardholder will probably have to place money in an account for at least 36 months before any debt will be considered settled. This is a substantial amount of time, which can often be troublesome for people already facing financial hardships. Further, there are many companies that are not reputable and simply act as a scam in order to take someone's money.

Should I file for bankruptcy?

Bankruptcy should be viewed as a last resort. Working with a trusted credit counselor could help someone take control of finances before it is too late. The U.S. Department of Justice maintains a list of approved, reputable counselors that can help people establish a budget and prioritize debts.

However, in some cases, filing for bankruptcy may be the best option for getting a fresh financial start. Bankruptcy can discharge or reorganize debts into a manageable payment.

Anyone who has concerns about this topic should speak with a bankruptcy attorney in Maine.