How to Eliminate All Your Debt & Not Consolidate

"Snowballing" your debt payments can help you pay off your debt faster.

"Snowballing" your debt payments can help you pay off your debt faster.

Debt consolidation provides a simplified way to pay off one's debt by providing a consumer with one monthly payment and a reduced interest rate. However, debt consolidation has its drawbacks: Nearly 70 percent of Americans who consolidate their debt accumulate the same amount of debt or more within two years. Paying off your debt aggressively can help you eliminate your debt and improve your credit score.

Make a list of your debts. Include the name of the creditor, the balance owed and the interest rate. Order the debts by interest rate, with the highest interest rate listed first.

Contact each of your creditors. Ask each creditor to reduce your interest rate and to waive any fees that have accumulated, such as late-payment or over-limit charges. Emphasize to creditors the lengths of your relationships with them -- if your records of payment have been good -- and explain extenuating circumstances, such as a recent layoff or illness. Signing up with a credit counseling organization may also give you a neutral party who can negotiate on your behalf.

Transfer the balances of credit card accounts with the highest interest rates to cards with lower interest rates. You may also be able to acquire a new card with an appealing introductory or balance transfer rate. The goal is to decrease the interest rates on your existing debts so you will pay less money in the long run.

Make the minimum payment on all credit cards and other debts so that you do not negatively affect your credit. Make a larger payment to the card or debt with the highest interest rate. Once you have paid off the account with the highest interest rate, add the amount previously paid on it to the monthly payment on the account with the next-highest interest rate. This creates a "snowball" effect that enables you eliminate debt faster.

Call a creditor and request a debt settlement if you want to speed up the process. A debt settlement means that a creditor will accept a lower portion of the debt than you owe to consider the debt forgiven. Beware that this strategy may decrease your credit score and require you to include the forgiven amount of debt as taxable income.

Items you will need

  • Credit card statements
  • Statements for other bills


  • Chapter 7 bankruptcy may be an option for consumers who have an overwhelming amount of debt. Consumers are generally required to be under a certain income level and must take a credit counseling course.

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About the Author

Samantha Kemp is a lawyer for a general practice firm. She has been writing professionally since 2009. Her articles focus on legal issues, personal finance, business and education. Kemp acquired her JD from the University of Arkansas School of Law. She also has degrees in economics and business and teaching.

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