Apply for bankruptcy
While bankruptcy could help you eliminate credit card debt or make a repayment plan to tackle it, filing often damages your credit for 7-10 years, potentially harming your ability to borrow money long-term. And if you do file, it may still not erase all your credit card debt.
Your purchases or property may also be subject to repossession in certain cases, even if your debt is erased.
Alternatives to credit card debt forgiveness
If your card issuer isn’t able to forgive your debt, there are other credit card debt relief options you can consider.
Debt consolidation
It’s possible to combine your debt into one loan or credit card balance with a single monthly payment, also known as debt consolidation.
Popular debt consolidation products may include the following:
- Personal loans: Depending on your creditworthiness, some personal loans may offer lower interest rates than your existing debts or may allow you to simplify multiple debts into one convenient payment.
- Balance transfer credit cards: These are credit cards that let you transfer one or multiple high-interest balances to a new card. This credit card may offer a low intro APR on balance transfers, which could make it easier to pay off your debt.
- Home equity lines of credit (HELOCs): These loans work like a credit card, charging interest on what you borrow up to your limit. They can be used to consolidate debt, but keep in mind, however, that HELOCs use your home as collateral, so failing to make payments may trigger foreclosure.
Credit counseling
Credit counseling groups are typically nonprofit organizations that help teach you money and debt management skills. Credit counsellors can’t eliminate debt, but they may be able to help you create a payment plan, also known as a debt management plan, that could help you negotiate lower interest rates and smaller monthly minimum payments.
Personal debt management strategies
If your debt level is relatively low, the debt snowball strategy, where you pay off your smallest credit card balances first, might make your debt more manageable. If your balances are bigger, you may prefer the avalanche method, where you pay off the highest-interest balances first. You can also combine both approaches while readjusting your budget to spend more money paying down debt and less on non-essential costs, like dining out, vacationing or shopping.
Can you use debt settlement companies?
Legitimate debt settlement companies offer credit card debt removal services for a fee, but some may be predatory or fraudulent, so here are some facts to keep in mind before choosing this route:
- Debt settlement companies often can’t settle all your debts
- You may pay unnecessarily expensive fees, penalty charges or other added costs
- Debt settlement companies may negatively impact your credit scores by encouraging you to stop making payments to your card issuer
- Your original creditor may take legal action against you if you receive debt settlement services
Ultimately, steering clear of debt settlement companies that charge you upfront fees or promise to settle all your debts may be the best move.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
