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Getting out of credit card debt

When people get into overwhelming credit card debt in Ohio, they may feel like the debt crept up on them. However, credit card debt is usually something that accumulates gradually before it becomes unmanageable. Because most people are given a low credit card limit to start out with, the trouble begins when the limit rises, and the credit card holder becomes tempted to overcharge.

Once an outstanding balance has climbed high enough, paying off credit card debt becomes harder because the interest on the debt compounds, and the minimum monthly payments are higher. Nevertheless, people with credit card debt do have options for getting out of debt. During the repayment process, it's important for debtors to limit their spending, prioritize high interest debts and refrain from making any more charges.

Although credit card companies are not obligated to take less than the minimum payment, many companies will work with a debtor to develop a repayment plan. Debtors can also try calling a credit card company to request a temporary reduction in the credit card's interest rate. In some cases, a settlement can be worked out with a credit card company in which the debtor pays off less than the actual balance in a lump sum.

Because forgiven debt is considered income, settling credit card debt can have certain tax consequences that debtors should be aware of. If debt is discharged as a result of bankruptcy, however, the debtor won't have to pay tax on it. Speaking with an attorney may be a good way for a debtor to gain a better understanding of what kind of debt repayment solutions are available to them and what solution would benefit them the most.

Source: Credit Cards.com, "8 things you must know about credit card debt ", November 21, 2014

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