It’s an all too familiar situation. Credit Card debts build up over time. The attractive introductory interest rate expired long ago, and the interest rate is now over 20%. Debt problems can seem overwhelming – but there are a number of ways to eliminate the debt.


I know – no one seems to like that word. But a bankruptcy discharge will, with a few exceptions, eliminate all of your credit card, as well as other unsecured debts.

Whether bankruptcy is a solution is something that you can decide after having a consultation with a bankruptcy lawyer.

Make the minimum payments

This is not a good solution to the problem. It will work (so long as you never use the card again), but will take many years, and cost a lot in interest. A calculator is available at, which will tell you the amount of time, and total amount of payments that will be required.

Making more than the minimum payment will get it paid off sooner, and save a lot of money. In order to do this, you may need to take a realistic look at your budget. Negotiating a lower interest rate can also help.

Debt Settlement

Debt settlement involves paying a lump sum in satisfaction of the debt. What the creditor will accept depends on many factors, primarily related to how likely they feel they will be able to collect the full amount. Whether the credit card company will work with you depends, oddly, on how far behind you are. If you are not behind on your payments, the bank will often take a hard line. Debt settlement is easiest with loans that have been sold to debt collectors.

Traps and Pitfalls

There are a number of traps, and pitfalls you need to avoid. Debt Settlement can create a tax liability.

One common mistake is to settle one account, without having a plan to deal with your other debts. Another factor to consider is the effect on your taxes. In some circumstances, debts that are settled for less than the amount that is owed are reported to the IRS as “debt forgiveness income,” which could result in additional taxes being owed.

If the debt is very old, you should determine whether it is barred by the statute of limitations. In Pennsylvania, the statute is four years (from the last payment, or use of the card). Beyond that point, they can no longer sue you for the debt – unless you make a payment; even a small payment will revive the debt, and start the four year period all over again. This can be a tricky area: if you are not sure whether the debt is beyond the statute of limitations, you should consult a debt collection attorney.

Do I Need Help

In some cases, particularly where there are only a few debts, there is no reason why you can’t work out some payments yourself. Many persons find it useful to have someone do the negotiating for them. Help can be obtained from many sources. Although there are some legitimate credit counseling agencies, there are also a lot of scams out there. Beware of any company that promises unreasonable results, or charges large fees before any results are seen.

I may be biased, since I do this for a living, but a consultation with an experienced consumer lawyer is the best place to start. For a modest consultation fee, you can learn about your options, and get some help deciding what is best for you.

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