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Credit Card Debt Relief: $10K+ Credit Card Debt?

Elizabeth Johnson

Financial Advisor
Updated: 07/2019

Credit Card Debt Relief

Credit Card Debt Relief Options

Opening a credit card can be one of the most exciting experiences in someone’s life. However, without proper knowledge or financial experience, opening a credit card can be one of the most debilitating financial decisions in someone’s life, leading them into the pathway of extreme debt. With the significant increase of interest rates, fees, and charges, more and more people are finding great difficulty in managing their credit card statements and evening struggling to make on-time monthly payment. Does this sound familiar to you? The reality is, hundreds of thousands of credit-card holders are in the same boat as you.

What’s important to know is that you are not alone. In fact, there are multiple financial tools that are available today to help credit card holders find relief, just like you. More specifically, we are referring to credit card debt relief. In today’s article, we are going to dive in and explore what credit card debt relief is all about, whether it’s a viable option for you, and the different forms of credit card debt relief. Who’s ready?

What is Credit Card Debt Relief?

Before we jump into the specifics of credit card debt relief, let’s start with explore what exactly credit card debt relief is. At the core, credit card debt relief is the conceptual background for the process or tactics utilized to bring relief to an individual in great credit card debt – hence the name: credit card debt relief.

Now, the topic of credit card debt relief is often misconstrued by the negative connotation that surrounds the industry; however, at the core of any credit card debt relief program is eliminating and reducing both interest rates and the total accumulated debt. Our goal and intention is to remove the haze and negative thoughts surrounding credit card debt relief in efforts to provide the information for consumers to make financial sound decisions.

When is Credit Card Debt Relief Viable?

The best way to judge whether credit card debt relief is a viable solution for you is to look at your current financial situation. Are you struggling to may monthly payments? Are you barely making ends meet aside from credit card statements? Is the stress becoming too much to handle? If you are finding yourself sacrificing more and more to ensure that a credit card payment is processing, it may be time to consider one of the many options of credit card debt relief. It’s important to know though that, some of the different options available may require a higher than average credit score to qualify. However, there are always different credit card debt relief programs for everyone. With that being said, let’s explore what’s available.

What Are Your Options?

At this point, you most likely have learned that perhaps credit card debt relief is a valuable option to consider in efforts of reducing interest rates and eliminating any credit card debt. Like any debt relief program, it’s vital to do proper and thorough research prior to signing any contract. With that being said, there are multiple different options of credit card debt relief that are available to consumers. Let’s see what they are all about:

Credit Card Issuer

The first credit card debt relief tactic that is available for consumers is something we like to call the Credit Card Issuer method. This tactic is actually one that is often mentioned by financial experts as one of the most effective means of credit card debt relief, without the lasting impacts of other debt relief programs. With this method, a credit card holder that is struggling with managing monthly payments can call their creditor in efforts to request credit card relief. The goal with this method is to be honest and genuine with the creditor and let them know what’s happening. It’s suggested that, if borrowers are planning on taking this debt relief route, be sure to have a dedicated plan to share with the company. For example: what are the reasons why you can no longer pay the contracted amount, how long are you requesting such changes for, and/or when you are anticipating making full payments again. In most cases, credit card companies are willing to work with borrowers, only if they are in great-standing with the company.

PROS:

  • This option is entirely free, which can help save money.
  • You can craft the best solution that you believe matches your needs.

CONS:

  • While this may be a great first option, there is always the risk that you may not be approved by the credit card company.
  • Depending on the situation, creditors can garnish paychecks.
  • Through attempting to break the contract, creditors may choose to file a law suit, which can be even more financially debilitating than credit card debt.

Credit Card Debt Counseling

Another great opportunity that is available for credit card holders is to get in touch with a credit counseling agency. This credit card debt relief method tends to be one of the most cost-effective and, in some cases, it’s free. Here, credit card holders can speak with trained professionals in the debt industry about their situation. As credit counselors, these agencies are designed to help evaluate credit card holder’s situations and offer the best possible feedback and solutions. In most cases, it’s suggest that, before picking just any credit card debt relief program, seek professionals at a local credit counseling company first. Now, before you are quick to schedule a meeting, be sure to see if the counseling agency charges any fees. Since there are non-profit and for-profit companies, it’s important to decipher the type of company you will be receiving advise from. We also advise credit-holders to stay away from credit counseling agencies that make bold promises, such as “eliminate your debt” or “stop making minimum payments forever.” Companies or agencies that do this are scams and not worth your time.

PROS

  • Credit card holders can seek professional and expert advice, learning precisely what their best options are according to their specific situation.
  • Non-profit Credit Counselors tend to have credit card holders’ best interest at the forefront of their solutions.
  • With credit counselors, credit holders will no longer have to make their monthly payments. These agencies will handle monthly payments to ensure everything is handled properly.

CONS

  • Depending on the type of company or agency you pick, they may charge for their counseling services. In our experience, it’s recommended to select a non-profit company to avoid this problem.
  • In the eyes of lenders and other financial institutions, utilizing credit counseling companies appears in the same category as an individual that files for a Chapter 13 Bankruptcy.

Credit Card Debt Settlement

Out of the many different forms of credit card debt relief, debt settlement is typically the most controversial. Debt settlement for credit card debt is when credit card holders simply stop making their monthly payments to their creditors. During this process, a third-party company, or a debt settlement company, jumps onto the scene to help negotiate your total debt in efforts to reduce it. For payment purposes, credit card holders are responsible for making monthly payments to the debt settlement company and, in response, the company will forward the funds to the credit card companies. Debt settlement for credit card debt relief should be seen as the second to last straw if no other credit card debt relief options worked. Reason being, the risks and consequences are so grand that it can impact a credit card holder for years upon years.

PROS

  • Individuals who enroll in debt settlement for credit card debt relief will notice that their debt may be reduced. There is no exact statistic proving how much; however, this is the main purpose for this relief program.
  • Like debt consolidation, debt settlement takes an individual’s multiple monthly payments into one cohesive payment.

CONS

  • Debt settlement is, without question, one of the most debilitating debt relief programs for your credit score. The moment that a borrower stops making their monthly payments, the credit bureau will be aware, and this will show as a delinquency. Typically, the debt settlement process between the company and the creditor takes four-five months, meaning, during this time, the credit bureau will think you are late for this period of time, stacking late fees upon late fees and other applicable charges. This will appear on your credit report for a maximum of seven years.
  • Since there is no guarantee or promise that a debt settlement company will come to an agreeance with your creditors, there is a significant risk factor that may even increase your starting credit card debt.

Credit Card Debt Consolidation

Are you the type of consumer that has multiple credit cards, all of which are maxed out and generating more and more interest charges? Are you struggling to stay on-top of your four or five credit card statements? This is where credit card debt consolidation companies come into the picture. Like typical debt relief debt consolidation companies, credit card debt consolidation companies specialize in credit card debt relief. At the core credit card debt consolidation is when a consumer opens a new loan to pay off all of their credit card debt. The purpose of this is to organize all of their credit card payments into one monthly bill at a lower interest rate, all in hopes of saving more money. Credit Card Debt Consolidation can be a fantastic means of credit card debt relief; however, there are a few disadvantages that people must be aware of.

PROS

  • Debt consolidation is a great method to help individuals organize their credit card debt into only monthly bill.
  • Debt consolidation can most certainly bring forth a strong sense of credit card debt relief for individuals that are feeling buried deep in credit card debt.

CONS

  • If an individual utilizes their home loan or other physical assets as collateral, debt consolidation companies may acquire these assets if they default.
  • If an individual is not careful during the research phase, they might end up paying more money than they would have if they did not consolidate their debt.

Bankruptcy

The absolute last case scenario of credit card debt relief is bankruptcy. In fact, the only people that should be thinking about this are those that are beyond their knees in credit card debt.  Typically, many people have no idea what bankruptcy actually is. In fact, if you ask around, many people think it’s when an individual loses all their Monopoly cash and hotels. However, we are not talking about passing go and collecting $200. Bankruptcy is gravely different. When it comes to credit card debt relief, bankruptcy should only ever be an option if there are literally ZERO credit card debt relief alternatives left. Here, credit card holders, there are two different types of bankruptcies to claim:

  • Chapter 7 – This is where the court system will, by law, eliminate all unsecured debt from an individual’s record.
  • Chapter 13 – This is known as the “reorganization” debt relief plan. Here, an individual will be required to pay back their debt within a specific time frame and with specific guidelines.

In either case, bankruptcy is incredibly risky and life altering. While it may offer a fresh-start in some circumstances, do take into consideration the many different disadvantages before taking this route.

PROS

  • By claiming bankruptcy, it may give an individual a fresh opportunity to restart their personal finances.
  • If you are constantly being heckled by credit card companies, after filing bankrupt, by law, these companies will no longer be able to contact you.

CONS

  • Bankruptcy is a financial decision that places your entire personal finances in the jurisdiction of the court system.
  • Through filing bankrupt, your credit report will show to lenders for up to 10 years that you claimed bankruptcy.
  • Once claimed, you can anticipate an increase of interest rates because future lenders will view you as a risk.

FAQ

A credit card is a powerful financial tool for whoever wields it. But if it’s not used responsibly, its effects can be financially damaging. And when you’re deep in credit card debt, the stress can be suffocating. But there are ways an individual can recover from credit card debt.

The Basics

When a person is in what seems like unending credit card debt, they can enter relief programs to help them manage their balance. But before going into the details, fundamentals must be stablished. So what are credit card relief programs?

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What is a credit card relief program?

These are various ways an individual can release one’s self of credit card debt. There are self-executed means and there are also services that can be availed from debt consolidation companies or organizations.

What is the Credit Card Relief Act?
It is a legislation that provides protection to consumers who enter into a debt relief program by preventing debt relief companies from charging heavy fees before the completion of the deal. It took effect in 2010.
Do credit card relief programs work?
Yes, debt relief programs should work. But you need to carefully choose what type of program to implement and commit to it. If not, you could end up in a worse financial state.
How does credit card debt relief work?
You enroll into a program, one provided by credit card debt relief agencies or executed by yourself, and stick to it. There are a few like: Negotiating with the credit card issuer directly, seeking counsel for a debt management plan, applying for a debt consolidation loan, asking for debt settlement, and filing for bankruptcy.
How do credit card relief programs work?

Each program has its own pros and cons: Negotiating with credit card issuers is the cheapest because it’s free, but the credit card company can reject your terms; credit counseling agencies can provide a payment plan that is best for a person’s specific needs, but may cost money; opening a debt consolidation loan will make paying off debt easier—especially for consumer’s with multiple credit cards—since they only have to pay one amount, but such loans require collateral; asking for a debt settlement will reduce the amount you have to pay, but it will significantly hurt your credit score; finally, filing for bankruptcy will wipe most of your debt, but it will appear on your record for years and thus will make you a risk in the eyes of lenders. Learn more about debt management program options.

How does a debt relief program affect your credit?

The debt relief company will ask you to stop making payments to the creditor for months. This will force creditors, who fear they will not get any payment, to settle for a sum that is lower than your actual debt. But your non-payment for months, and the fact you didn’t really pay the full amount, will stay in your credit history for years.

How to get credit card relief?

You can start with yourself. Create a plan that will slowly but surely pay off your credit card debt. If you prefer to seek professional advice, there are plenty of options. Make sure to do your research from which agency you will seek advice from. You may also want to read our National Debt Relief review to see if they would be a good fit for you.

Are credit card relief programs a scam?

No, there are many debt relief agencies or companies that are legitimate. But not all agencies are created equal, some are better than others. It’s best to avoid those that make promises that are too good to be true.

How can I get rid of credit card debt legally?

The first step should be to look into your lifestyle. Go through your expenses and look for areas where you can save and cut down on expenditures.

How can I eliminate my credit card debt legally?

First you need to know how much you owe and how much you earn. Track your spending and cut off expenses that are not necessary. Stick to a budget so you spend your money wisely. Everything you did not spend you can throw to your credit card debt. You can also look at Freedom Debt Relief reviews and decide if this kind of assistance makes sense for you.

How can I get out of debt with no money?

Look around your house. You may have a lot of things that you don’t use anymore that may be sold for cash.

How can I pay off debt fast with no money?

In addition to selling your stuff, find ways to make extra income. You can take side jobs like freelance writing or driving for Uber or Lyft. You can also look for online surveys that can be monetized. Learn more about other ways to pay off credit card debt fast.

How do I get out of credit card debt fast?

There is no shortcut in getting rid of debt, especially if you owe a large amount. Patience and discipline in sticking to your payment plan is important to pay your debt as fast as possible.

Is there credit card relief for a disabled person?

There are no credit card relief programs specifically for disabled persons. But the government offers benefits and service for disabled citizens to help them spend their money to more important matters, including credit card debt. 

How do you qualify for credit card debt relief?

You need to have legitimate financial difficulty before credit card debt agencies can give you their services. You must be experiencing real hardships like losing a job or getting a pay cut, going through a divorce, having expensive medical problems, or having debt that simply spiraled out of control.

Is there IRS credit card debt relief?

The IRS does not offer programs to relieve an individual from credit card debt. But they do have tax debt relief for persons who can’t afford to pay taxes on time. There is a qualification process.

The How-tos

Now that you know the basics if credit card relief, we can go into details like how you can enter these programs and discern what you’re really getting into. In the end, you will know if credit card relief is really worth it for you.

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How can I settle my credit card?

Settlement of your credit card debt, or paying an amount lower than what you actually owe, requires you to approach credit counseling agencies or credit settlement companies. They will negotiate with the bank on your behalf. Before you commit to one of these companies be sure to compare debt relief program reviews to see if you’re going with the best option.

Can you negotiate paying off a credit card?

Banks will not easily forgive your credit card debts. But you can negotiate better interest rates, payment dates, long-term payment plans, or settlement of your debt. Use a pay off credit card debt calculator to estimate different scenarios.

Can you negotiate a lower payoff amount on a credit card?

Yes you can. But it will hurt your credit score badly and will be recorded for years. Credit card issuers may not approve future applications and lenders may give you higher interest rates.

How do you negotiate with creditors?

You can appeal to them directly by making a phone call (or several). You can ask for them to waive or at least reduce the monthly minimum payment, decrease your interest rate, and remove past late fees. This will reduce your overall debt. If this is concerning taxes then read more about IRS tax debt relief.

How do you offer a full and final settlement?

You can also negotiate for a lump-sum settlement with the creditor. This “full and final settlement” offer is a reduced sum to pay off your debt. You need to submit the offer through writing. Make sure the credit accepts your offer through writing as well.

How do I settle with a collection agency?

When your credit card debt is already with debt collection agencies, you may be able to negotiate a more affordable payment or arrange to pay in installments.

Is debt settlement really worth it?

Although you will pay a lower amount, it will hurt your credit score and your viability to apply for loans and credit cards in the future. But settlement is better in your credit history than non-payment.

Will settling credit card debt hurt my credit score?

Yes it will. It will show up in your credit report for up to seven years.

Will settling with a collection agency hurt my credit?

Anytime you end up settling your debt instead of paying in full amount, your credit score will negatively be affected.

How much can you settle credit card debt for?

It will depend on what amount you and the collector agree upon. As a tip, start your negotiation by offering a payment lower than what you are actually willing to pay. Collectors will more than likely have a counteroffer.

Can you settle credit card debt if you are current?

If you make a payment large enough to satisfy any past due balance, your account will be current and you won’t have any debt.

What is the Coalition for Credit Card Relief?

It is a credit card debt relief company which offer services like debt management.

The Costs

If you default on your credit card payments, there will surely be consequences. And the effects can haunt you for years to come.

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Can you go to jail for not paying your credit cards?

No you can’t. But you can be sued in civil courts. If you’re in college then consider student debt consolidation before it gets any worse.

How do I get out of credit card debt without ruining my credit?

Although paying your debt in its entirety will still negatively affect your credit score, it’s not as bad as nonpayment. Take note, previously reported late payments will not be erased after paying in full. It will take time before it is removed from your history.

Can they garnish your wages for credit card debt?

Yes, if collectors sue you and secures a court order to garnish your wage (when employers are ordered to withhold a part of your debt to pay off debt).

Can they take your house for credit card debt?

Initially, they can’t because credit card debt is unsecured debt. But if creditors file a lawsuit against you and win, they can collect your debt by going after your non-exempt property.

What happens when credit card debt is not paid?

When you don’t pay your credit card debt, it will only get worse over time. The credit will write your debt as a charge-off and damaging your credit score. After that, creditors can sell your debt to collection agencies that, in turn, will pester you to pay off the debt. Creditors may even decide to take legal action for your nonpayment.

Does credit card debt relief hurt your credit?

All forms of credit card debt relief will hurt your credit standing. The degree will vary on what action you choose to take.

Elizabeth Johnson


Elizabeth is an expert on Debt Consolidation as she provides helpful advice to people who are dealing with debt problems. She graduated college with a BS in Finance. After college, she took a job working at a non-profit debt counseling program. It was at this position where Elizabeth honed her expertise for helping people understand how different financial products work and finding ways to help people pay off their debts.