How can I legally settle credit card debt?

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I’m 23 years old, a student, and physically becoming ill due to the amount of stress I have between school and work, in which I still struggle to pay my credit card bills. What is the step by step legal way of settling my credit card debt? I understand the ramifications that my credit report will suffer, but my debt to income ratio is already too high to get any loans or credit anyway (student loans). What is the worst that can happen? Are there any companies that help students in my situation? Thank you.

  1. Reply
    You may be right
    August 18, 2011 at 12:41 am

    Never spend more than what you have. Depends on how much you owe, if me I would just pay a monthly payment each month for what I can afford and tell them this is all I can do, can you accept this as payment as I pay it off and not add on anymore interest, because otherwise I can’t pay.

    If they are smart they will accept it otherwise they will not get any money. Usually they will make a deal of some sort.

  2. Reply
    August 18, 2011 at 1:12 am

    Try paying the bill.

  3. Reply
    August 18, 2011 at 1:42 am

    It depends on the amount of debt that you actually owe. If you owe more that $ 8,000 you might need to consolidate your credit card debt and pay one monthly payment. This is what i would do. Your 23 in college if it’s possible to take out a federal student loan and use all that money to pay as much credit card debt as you can. Some say this is a bad option but i think it’s the best in your situation the reason why is your credit card interest rate is way higher than interest rate on a federal student loan. You will have to payback this student loan at a much lower interest rate. If that option just sounds no good to you then picking up a second job is another option. Your only 23 you don’t even need good credit at this point your credit score will recover but with credit card interest the longer it takes you to pay the more stress it will cause you.

  4. Reply
    August 18, 2011 at 2:14 am

    Maybe….The big factor is how far you are behind in your payments. Creditors will not settle on current accounts nor do they have any incentive to. You have to be way behind in payments…at least 3 months or more, before you might be able to negotiate any settlement for less.
    – You can only settle for less if you can pay the settlement up front or at least within 3 months. They won’t settle for less if you can only pay the settlement in small payments per month over several years.
    – Every creditor is different and will respond differently to your going way past due or defaulting. No creditor is obligated to take any settlement for less and it’s their right to demand the full amount if you default. Still, many creditors will settle for less if you’re like 5 months past due and you can pay the settlement up front.
    – Stay away from any Debt consolidation firm that promises to cut your payment and debt in half. These firms work by having you deliberately default on your cards. This is a risky move and if it fails, you could be sued by your creditors.
    – If you’re struggling with credit card debt and you’ve exhausted all self help options, then there are really only 2 options: Entering a debt management plan through a non profit credit counseling firm like NFCC or filing for Chapter 7. NFCC can negotiate reduced payments and interest but NOT settlements. Referral at: – If this does not work out, the other option is Chapter 7 bankruptcy.
    – For your question on what happens if you completely stop paying your credit cards, see my answer at

  5. Reply
    August 18, 2011 at 2:50 am

    If you settle you will have to pay income tax on the amount you don’t pay.

  6. Reply
    August 18, 2011 at 3:46 am

    You attempt to bargain for a settlement with the creditors – plain and simple. You cannot FORCE them to settle for less than the full amount of the debt, however; there is no entitlement to that.

  7. Reply
    August 18, 2011 at 4:05 am

    Generally speaking, there are 2 ways to settle – you either negotiate a settlement with your creditors yourself, or use the services of a settlement company.

    If you do it yourself, your success depends on how well you convince your creditors of your inability to make your payments. This article gives you an idea of what goes into the process:

    If you do it via a settlement company, your first task is to ensure that the company you want to work with is reputed, and not a scam out there to rip you off. One tip is, per new FTC laws, settlement companies cannot take full fees upfront, before they deliver the services; so any company that asks you money upfront is not in your good interest. This article provides other ideas on how to make sure a company is genuine:

    Either way, creditors generally don’t agree to settlement unless you are already several months lagging in payments. Since settlement stays on your credit report for 7 years, the worst that can happen is you may not be able to get new credit for that period of time. Of course, you can use that time to build positive credit history, if that is possible. Additionally, the credit accounts that you are settling will be closed for future charges, and you will owe taxes on any debt that is forgiven.

    If you are going through with settlement, make sure you get the settlement in writing, before paying anything. Hope this provides some idea and perspective. Good luck.

  8. Reply
    stan c
    August 18, 2011 at 4:31 am

    If you owe over $ 10,000 which does not include student loans, perhaps you should contact a bankruptcy attorney and see what your options are. Usually the first visit is free. You are not the first and probably not the last individual in this situation. It’s not worth killing yourself over these debts.

  9. Reply
    My Take on It
    August 18, 2011 at 4:38 am

    Contact a local chapter of
    They will help you with your creditors, lower interest rates and payments and get you on a plan to get this debt out of your hair.

    The worst that would happen is you stop making your payments and default, your accounts get sent to collection agencies, they sue you and your wages get garnished.

    Just know that when enrolled in credit counseling, you will have to give up those credit cards and will not be allowed to get new credit.

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