Man sitting and holding his credit card

How to Pay Off Credit Card In-debt without Paying Every Dollar You owe

It can be a challenge to pay off outstanding credit card debt. It can be challenging to imagine how you will get out of debt, and it is easy to feel as if you’re facing the wall.

One suggestion, which sounds appealing in the abstract, is to figure out how to get rid of debt and not pay it off.

It’s undoubtedly appealing; however, pursuing it could be more harmful than beneficial. Here are the methods you can get rid of debt, without paying all the debt you owe, with some important reasons to look at alternative options.


In this post, we’re talking about specifically consumer credit cards. There are various types of debt with “forgiveness” options, for example, student loans.

But, there aren’t usually formal “forgiveness” choices offered by the major credit card firms.

If you use your credit cards, lenders are fully confident that you’ll repay the funds. If you have a long period of non-payment monthly payments, they may reduce their expectations and even charge off the accounts and then send these accounts off to collections.

In the following time, you may have the opportunity to negotiate alternatives to pay your debts less than the amount you have to pay. But these are always accompanied by the risk of affecting your score on credit.


A debt settlement agreement is a contract with a lender to pay less than you owe while having the debt considered to be satisfied.

There are two main kinds of settlements for debt. The first is the debt settlement you can negotiate by yourself. This is known as “DIY credit settlement.”

The other kind is an expert debt settlement. In a professional settlement, the client collaborates with a settlement company that oversees your debt reduction strategy.

However, professional debt settlement is a very risky choice that doesn’t always work for you. There are two main reasons you should steer clear of this option, regardless of how appealing it sounds.

Debt Settlement

First, you could be a significant risk to your credit score if you partner with a debt settlement company. The concept of debt settlement is based on an arrangement where you don’t pay your creditors and instead make payments to the company that settles your debt instead.

Settlement firms argue that your inability to pay can give them leverage in negotiations against creditors. They can offer lump-sum payments to creditors based on the funds you’ve sent them.

But not only does this never happen (more on it in a minute), but it also wreaks chaos for your credit rating. You’ll rack up indebtedness and other marks when you adhere to the plan.

Even if the resolution is successful, it could cause additional credit score harm since the accounts you settle are recorded as credit-related on the report.

In addition, debt settlement has a low rate of success. This means that not only could your credit suffer, but, it could also be a victim of debt settlement without ever seeing the advantages of actually paying off your debts.

Research has shown that most people who use debt settlement do not resolve half their debts years after beginning to settle debts.

A small percentage of people successfully pay all their debts through an organization that deals with the settlement.

Settlement of debt isn’t inexpensive, but neither is it expensive. It’s possible to expect to pay between 15 to 25 percent of the debt. In addition, If the debt is repaid, the amount forgiven is considered taxable income!

You can see that although settlement might sound like an excellent alternative, it can cause an enormous headache, cost, and credit damage and could make you worse off than before it.

What do you think about the DIY settlement?

Although working with a company to reach a debt settlement is not without disadvantages, negotiating a deal by yourself can be an effective and secure alternative.

But, it’s not ideal and is only feasible in a handful of circumstances. To achieve DIY payment of a debt, you should call your creditor and agree to a lump sum less than what you owe.

This is what the creditor will accept in exchange for the consideration of making that the account is satisfied. If you agree with a lender and you want to sign the terms written.

Otherwise, you could be charged an amount in one lump sum but not prove the creditor has agreed to accept the payment as an agreement to settle.

It can be tough to complete before your account is taken care of by the lender. Creditors don’t have much motivation or incentive to accept the settlement offer until they are a long way behind.

In that case, your credit score likely has taken more extensive than several damages. Furthermore, a settlement you reach on your own may remain reported to credit bureaus.

So, even though a DIY settlement is more secure than working through a fly-by-night settlement service, it can come with several negatives. The most significant benefit is that you can get rid of the charges charged by a company.


Another method of debt relief could offer partial bankruptcy to forgive debts. There are various types of bankruptcy. However, individuals generally choose to file in the form of Chapter 7 or Chapter 13 bankruptcy.

The possibility of filing to file for Chapter 7 or Chapter 13 is dependent on your income as well as whether you meet the requirements to file for Chapter 7 under the “means test.

” Chapter 7 bankruptcy is relatively simple and can eliminate the debts you cannot pay with what’s known as the “discharge.” Chapter 13 bankruptcy may also grant the possibility of a discharge, but usually only after you’ve completed the repayment plan, which can take between three and five years.

Bankruptcy can be a significant cause of damage to your credit. The period leading up to bankruptcy can cause some damage, but your bankruptcy will end up being reported to credit bureaus. Chapter 7 bankruptcy remains on your credit report for ten years. The other, Chapter 13, remains for seven years.

For some, bankruptcy may be the most effective option to move forward. The NFCC offers guidance on bankruptcy via two kinds of counseling mandated by law in the bankruptcy procedure.

If you’re in a position to qualify to file for Chapter 7 bankruptcy, it could be the best option to move forward. But, it’s very risky and has long-term implications, and should only be considered an option last resort.

People who aren’t suitable to file for Chapter 7 may find better alternatives to bankruptcy, which will cause minor damage over the long term.

Better Alternatives

There are alternatives to bankruptcy or debt settlement. If you’re having difficulty paying your bills, you could be able to benefit by changing the conditions of the debt instead of trying to settle for less than your total amount.

Refinancing or consolidating credit card balances is a method to reduce the cost of your debt. It is possible to roll over your debt into a new one with a lower rate of interest, which could lower the cost of your payments and help you pay it off faster.

But, if your credit score isn’t excellent, you probably can’t qualify for the best rates, so this strategy won’t be financially beneficial for you. Avoid falling into the “consolidation credit” trap with poor terms, which will not help you.

For most people in debt, a debt management program might be the best option. It offers a planned repayment plan to pay off all indebtedness under the guidance of and with the advice of a credit advisor.

The majority of debts enrolled in the can be repaid with no costs and at lower interest rates. This implies that the plan has some of the same benefits as consolidation but is an option for those with credit scores that aren’t great.


Making payments more minor than the amount you owe is the ideal option when you’re in financial trouble. But the techniques that make this dream a reality can have serious adverse effects. If bankruptcy seems like the only option to take, you consider it.

But remember that bankruptcy is only a last resort, and you should look at other options first. Debt settlement, on the contrary, is not an option.

If you can agree to a settlement for an outstanding debt past due, it could be an option. However, you should avoid professionals who offer debt settlement services at all expenses.

If you don’t cancel any debts, you could still get helpful changes, including low-interest charges. These options can make the burden of debt less burdensome and not harm your credit score in the same way as bankruptcy or settlement.

If you’d like assistance in evaluating your options and forming an action plan, you can speak with an expert in credit counseling for no cost and be debt-free.


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