Credit Card Debt Relief: 5 Ways to Get Out of Debt

You open your mailbox and find another letter from a creditor. Your stomach sinks. Credit card debt feels overwhelming, but relief is within reach.

Americans carry a median credit card debt of $3,706 per person. With inflation hitting 8.5% and wages staying flat, paying down debt feels impossible. Home prices have soared. Basic living costs keep climbing. You’re not alone in this struggle.

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Getting out of debt changes everything. No more wasted money on interest. More cash for retirement and investments. Freedom from constant worry. You can make it happen.

Two Proven Methods to Pay Off Debt

The best way to eliminate debt is to pay it off strategically. Two methods work particularly well: the snowball method and the high-interest method.

The Snowball Method

List all your debts from smallest to largest. Make minimum payments on everything except the smallest debt. Throw every extra dollar at that smallest balance.

Once you eliminate the smallest debt, move to the next one. Your momentum builds as each balance disappears.

Example: You have $500 in medical debt (minimum payment $50) and $1,500 in credit card debt (minimum payment $100). You have $300 monthly for debt payments.

Pay $200 toward medical debt and $100 toward the credit card. After three months, the medical debt is gone. Now you can put the full $300 toward your credit card.

The High-Interest Method

Attack the debt with the highest interest rate first. Make minimum payments on everything else. You’ll save hundreds or thousands in interest charges.

Example: You have three credit cards:

Card 1: $1,000 at 10% interest
Card 2: $2,000 at 15% interest
Card 3: $3,000 at 5% interest

Each card requires a $50 minimum payment. You have $300 available monthly. Pay $200 toward Card 2 (highest interest) and minimums on the others.

Debt Consolidation: Is It Right for You?

Debt consolidation combines multiple debts into one loan. You pay off all your creditors at once. Then you make a single monthly payment.

You’ll need decent credit to qualify. The best consolidation loans offer low introductory rates for six to twelve months.

Pay off your balance during the intro period and you’ll avoid interest completely. You could save hundreds of dollars.

But proceed carefully. Missing payments or extending beyond the intro period can cost you more than you save.

Debt Settlement: The Pros and Cons

Debt settlement means paying less than you owe. Creditors agree to accept a fraction of your balance. You can settle debts yourself or use a settlement program.

The downside? Your credit score will take a hit. But if you’re already behind on payments, your score is likely suffering anyway.

Settling Debt Yourself

You can negotiate settlements directly with creditors. It takes time and research. You’ll need to understand your rights and proper negotiation tactics.

The benefit? You keep all the money you save. No fees to third parties.

Using a Settlement Program

Debt settlement companies handle negotiations for you. They may settle debts for 30 to 60% of the original amount.

The catch? These programs charge fees up to 25% of your debt. Success isn’t guaranteed. Creditors don’t have to accept settlement offers.

When to Consider Bankruptcy

Bankruptcy is a last resort. Use it only when no other option works. Two types exist for individuals: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Chapter 7 eliminates most debts without repayment. You must meet income restrictions and have few assets. Most unsecured debts disappear completely.

Chapter 13 Bankruptcy

Chapter 13 creates a repayment plan for three to five years. You keep your home and vehicle. Some debts are reduced or eliminated. Others must be repaid in full.

If bankruptcy seems like your only option, speak with a bankruptcy attorney for free to explore your choices.

Already Been Sued for Credit Card Debt?

Don’t panic if you receive a lawsuit summons. You have options. File an Answer to the lawsuit within your state’s deadline. Then begin settlement negotiations.

Many debt collectors will settle for 50% or less. They often bought your debt for as little as 8% of the original amount. Even at 50%, they make huge profits.

Our partner Solo can help you respond to a debt lawsuit and negotiate a settlement that works for your budget.

Taking Action on Credit Card Debt

Credit card debt relief starts with a decision. Choose your strategy based on your situation:

Can you make extra payments? Use the snowball or high-interest method.
Have decent credit? Consider debt consolidation.
Behind on payments already? Explore debt settlement.
Completely overwhelmed? Bankruptcy might be necessary.
Facing a lawsuit? Respond immediately and negotiate settlement.

The worst thing you can do is nothing. Every month you wait costs you more in interest and stress. Pick a path forward today.

If you’re being sued for credit card debt, time matters even more. You typically have only 14 to 30 days to respond to a summons. Missing that deadline means automatic judgment against you.

Frequently Asked Questions

What is the fastest way to get out of credit card debt?

The fastest way is to use the high-interest method: make minimum payments on all debts except the one with the highest interest rate, then put all extra money toward that high-interest debt. You can also consider debt consolidation with a low introductory rate if you have good credit.

How do I settle credit card debt for less than I owe?

Contact your creditor directly and offer to pay a lump sum for less than the full balance, typically 30-60% of what you owe. Creditors often accept because they purchased the debt for pennies on the dollar. Get any agreement in writing before making payment.

Can I negotiate credit card debt if I've been sued?

Yes, you can still negotiate even after being sued. First, file an Answer to the lawsuit within your state's deadline to avoid default judgment. Then send a settlement offer to the debt collector. Many will accept 50% or less because they bought your debt at a steep discount.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 eliminates most unsecured debts without repayment, but requires meeting income limits and having few assets. Chapter 13 creates a 3-5 year repayment plan, allows you to keep your home and car, and reduces some debts while requiring full payment of others.

How does debt consolidation work for credit card relief?

Debt consolidation involves taking out one loan to pay off multiple credit cards. You then make a single monthly payment at ideally a lower interest rate. The best consolidation loans offer 6-12 months of 0% introductory interest, allowing you to pay down the principal without accruing additional interest charges.

Credit Card Debt Relief: 5 Ways to Get Out of Debt Fast