The first thing you need to do is get rid of the idea that you need to have credit and that your credit is ruined. Both are so far from the truth it hurts.
Like many (and myself) I fell for the idea (trap) that you have to have credit to do anything in life. I found out the hard way, like you are doing now that that is a just a bunch of poopoo. Its a PR line created by the banks.
Banks have only two agenda:
- Figure out every way possible to put you in debt; and
- Figure out every way possible to keep you in debt.
It is just that simple. They have only one legal responsibility and that is to make money for their shareholders. You are definately not a repsonsibility for them.
Now as to our options. You there 4 major options you need to look at. But which one you choose has many varibles. It really is determined one what you are more comfortable with and what you can afford. But biggest requirement, and the one that ALL your decisions are based on is: You need to put a roof over your head and food in your belly for you and your family.
The options are:
1) Consumer Credit Counseling. This option is only workable if you can afford 2.5%-3% for a minimum payment. In other words, if you can’t afford minimum payments now, then this NOT the solution to you – unless you can budget effectively to be able to afford it. More in this video:
2) The “Snowball” or “Roll-up” methods. Same program different name. Basically this is good if you can budget minimum payments plus at $100 or more a month for the bills. If you can’t do that, then this is not your best method.
3) Debt Settlement. If you can’t do Consumer Credit Counseling or the “snowball” method then this is the last option before bankruptcy. There are three different types of settlement. There is a) the front fee based companies, b) the performance fee based companies, and c) doing it yourself. Try the performance fee first, but if you can’t afford that program then try the more extreme version which are the front-fee based companies, and if neither of them are good for you then doing it yourself may be the best option.
4) The last option is bankruptcy.
Don’t fool yourself. Every option has its pros and its cons. 3 out of 4 will harm your credit in some way.
Research the companies thoroughly and choose your best option.
I hope that this helps.