There are two options to get rid of credit card debt: pay it, or don’t pay it. If you’re financially strapped and having trouble paying down your credit card bills, you can increase your income or temporarily delay another debt. Nonpayment options include negotiating a debt reduction plan or filing bankruptcy.
Increase Your Income
Taking a second job or working overtime at your job may temporarily increase income until you’ve paid off your credit card. Make a plan, determining how much more you can earn each month and how long it will take to pay off the debt. Determine how long you’ll need to work using an online calculator (see Resources). You can also look around your place for things that might sell. The obvious choice would be to sell a car that’s not absolutely necessary to get you to work. Other items that sell well: electronic gadgets such as iPods, or fine jewelry.
Prioritize Your Bills
If increasing your income by selling your possessions or increasing your workload are not feasible, consider delaying payments to another creditor temporarily. You can’t do this forever, but desperate times might necessitate this option. There are some bills that should always take precedence to credit card bills. Not paying mortgage or rent payments, child support, tax payments, and utilities have consequences that trump credit card payments. However, medical bills and student bills could be temporarily delayed, although your credit rating will suffer. Be warned, though: Delaying student loans for more than 270 days could lead to wage garnishment.
Negotiate Debt Consolidation or Reduction
If you’ve determine that paying the full amount of your credit card balance is not likely in the foreseeable future, you may contact your credit card company to talk about reducing your balance. Most credit card companies are willing to help those in financial straits. Start by asking them to waive late and overlimit penalty fees. Next, ask for a reduced interest rate. You may want to contact a credit counseling service before attempting to negotiate a reduced balance with the credit card company. Go to the U.S. Trustee Program website (see Resources) for a searchable list of approved credit counseling services.
File for Bankruptcy
Filing for bankruptcy almost always dismisses credit card balances. This option, of course, can be devastating to your credit rating unless it is already as bad as it gets due to your late payments. There are two options. Chapter 7 bankruptcy requires that you sell off most of your assets except your home and other protected asserts to pay off as much debt as possible. All remaining debts are dismissed. Chapter 13 allows you to reorganize your debts and pay them off over time, although credit card debt will likely be dismissed.
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