This concern plagues far more Americans than you might think, as many households have $15,000 in credit card debt or more.
As bad as that is, the fact is it increases on a daily basis, thanks to compound interest charges.
You too, are likely to be wondering how to legally get rid of credit card debt, given you searched this topic.
The good news is there are ways to do it, however it’s going to be something of a long process.
It took time for the problem to accrue, so you’re going to have to expect it to take some time to get rid of as well.
Keep your chin up though — it can be done.
Here’s how.
Debt Snowball Plan
Let’s say you have three credit card accounts totaling $15,000 in obligations.
One card has a balance of $7,000, with a $150.00 minimum payment.
The second one has a $5000 balance and a $100 minimum payment.
The third has a $3000 balance, with a $75.00 minimum payment.
Let’s also say your budget leaves you $900.00 monthly to pay these bills.
Most people would divide that $900 evenly between all three accounts, paying $300 each.
This is a mistake, as it will take far longer to pay them off at this rate.
A better play is to begin by making minimum payments on the first and second card and put the rest on the third.
Doing so would give you $725 dollars to use to pay down the lowest balance first. To keep the math simple, let’s forget about interest for a moment.
This means that the $3,000 balance would be paid off in just over four months, as opposed to 10 months if you only paid $300 monthly.
With the third debt paid off, you now have $825 to put toward the second lowest balance, which could be paid off approximately six months later.
You’ll then have the full $900 to put toward the last balance, which would kill it just over six months after that.
This would eradicate the $15,000 debt in 16 months as opposed to 46 if you divided the $900 evenly between all three accounts.
Credit Counseling/Debt Management
Another way to go is with a debt management plan administered by a credit counselor.
This person will examine your finances and offer you tips on budgeting, money and credit management.
Depending upon the severity of your situation, they might also recommend a debt management program in which they’d negotiate with your creditors to help make debt repayment easier.
You’ll then deposit money with the counselor each month, rather than paying your creditors directly.
The counselor will then pay the bills on your behalf.
You’ll be charged a fee for this service and you’ll be required to close credit card accounts.
However, it is a proven method of legally getting rid of credit card debt.
Debt Settlement/Negotiation
Another approach is working with a debt settlement firm to negotiate significant concessions from your creditors, in exchange for a one-time payment in full of the agreed upon remaining balance.
This form of credit card debt relief is also proven to work, however it does have some pretty significant consequences including lowering your credit score, fees and possible tax liabilities.
Bankruptcy Protection
Filing for protection under the bankruptcy laws is the ultimate method of legally ridding yourself of credit card debt.
However it comes with the most severe consequences of any of the methods listed here.
Your credit score will drop precipitously and that bankruptcy filing will appear on your credit report for as many as 10 years.
You’ll also pay legal fees to get an attorney to help you with the filing.
Still, in a worst-case scenario, this is a viable measure for getting a fresh start.
Each of these means of legally ridding yourself of credit card debt has been proven successful.
The one you choose should be predicated by your ability to pay and your tolerance for the consequences.