Unpaid credit card debt is a major contributor to a bad FICO score and can limit your ability to qualify for home loans, auto loans, and more. When dealing with unpaid credit card debt you have several options that can help remedy the situation and improve your rating with lenders so that you can borrow money in the future.
Your first option is to pay your unpaid credit card debt in full. If you have funds available you might want to highly consider this as your best options This is because it will do the most to improve your FICO score. However, this requires you to have the full amount of money needed to cover the account balances and fees.
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If you don't have enough money to pay your balances in full (which most people reading this article probably won't) then there are some other options that will offer a solution.
The second option in handling your unpaid credit card debt is to file bankruptcy. Bankruptcy can wipe out your unpaid credit card debt balances completely or partially depending on what type of Bankruptcy you file. Also, in most cases, this choice will stop creditors from calling and harassing you. The major disadvantages to this option is that a bankruptcy filing will stay with your FICO rating for as much as 10 years and many prospective employers, etc. look unfavorably on this method of handling your situation. Also, Bankruptcy Attorney's often charge large up front fees for their services.
The third way to conquer unpaid credit card debt is to get a consolidation loan to pay off the bills and combine them into one loan. This often lowers monthly payments by offering a longer period for the payback or lowering the high rates that most unsecured accounts charge. However, this solution can take nearly as long to pay off as the original balances if you were to make minimum payments. Also, this option can be difficult to qualify for if your FICO score is already too low.
A final option for taking care of you your unpaid credit card debt is to work with a company to settle your balances for a portion of what is owed in total. In some cases, reductions of 20-70% may be accepted by lenders with proper negotiations which can cut down the time it takes to pay back your owed monies and get you back on track in a shorter period of time. The major downfall of this is option is that it could hurt your FICO rating if your scored is still somewhat high. However, if your score is already low then the effect it will have will probably be minimal.
Dealing with and conquering unpaid credit card debt can be a tough pill to swallow but will pay dividends in the long run. Working with an experienced professional or advisor can also help you decide which options make the most sense for your situation, and allow you to remedy the problem as rapidly as possible.
There are many free services that offer financial solutions, advice, & consultation and these companies can often recommend reputable companies that can fit your needs and budget.
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