How to Get Out of Credit Card Debt Without Paying It All (Or Ruining Your Credit)

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Credit cards can be a blessing or a curse. Unlike student loans, mortgages, and car loans, you can use a credit card to fund just about any purchase. The flexibility, along with rewards and welcome bonuses, is convenient, but it also gets a lot of Americans in trouble. Approximately 55% of Americans are in credit card debt, and it represents 26% of the entire consumer debt load. Many of the underlying causes, such as medical and divorce costs, are no fault of the borrower (and can often cause bankruptcy). These issues not only create debt but also make it much more difficult to pay back the original loan balances. Fortunately, there are ways to get out of credit card debt without paying it all back.

Getting out of credit card debt is a lot more difficult (and less enjoyable) than getting into it, though. Even if you avoid paying back the full balance, you’re going to lost a lot of time, money, and potentially points on your credit score to get back to a positive net worth. Here are the best ways to get out of your credit card debt with your finances and credit in the best shape possible.

Work With Your Creditors

It’s easy to think that creditors are the enemy when trying to get out of credit card debt. It can feel like they’re inflicting some sort of punishment by demanding payment, but they’re not. They’re looking out for their self-interests, just like everyone else, and it does no good to resent them for it.

Working with creditors to reach a mutually beneficial outcome is the best way to get out of credit card debt without paying it all back or ruining your credit. There are two things to keep in mind when negotiating with them:

  • Lenders are a business: They want to optimize the amount of money they make for their efforts and their risks. They don’t want to have to go through a lengthy collections process or sue their debtors to get their money back. They have every reason to accept a deal if it will benefit them financially.
  • Lenders are people: They don’t want to take advantage of their borrowers (there are some exceptions). Most of them have programs in place to assist customers who are struggling financially. They may be willing to accommodate job loss, health issues, or other extenuating circumstances.

Before resorting to more drastic debt-relief options, it’s always worthwhile to reach out to creditors and attempt to negotiate. They may be more inclined to indulge an appeal toward their business savviness or the human element, so try both approaches.

Debt Management Plan

Best For: Minimizing damage to your credit score.

Debt management plans essentially outsource the negotiation with creditors to a trained professional. They also serve as a debt consolidation of sorts, which can make it easier to manage debts in the short-term.

Here’s how they work:

  1. Hire a service provider: Debt management plans require the use of a credit counselor or other service provider. The debtor makes a single monthly payment to the provider, who uses the funds to pay their creditors.
  2. The provider attempts to negotiate: The provider will also reach out to each creditor and try to negotiate better terms on the borrower’s behalf. That might be a lower interest rate, a lower monthly payment, or a re-aging to reduce penalties.

Credit counselors are usually the best source for debt management plans. Unlike their other services, the plans won’t be free, but they are still more likely to be affordable than strictly for-profit companies.

Borrowers can save some money under a debt management plan if their plan manager can negotiate lower interest rates, but they will usually have to pay the full principal balance. That means that these aren’t always the cheapest option, but they’re best for the borrower’s credit score since the creditor doesn’t have to settle for less.

Debt Consolidation

Best For: Saving on interest expenses (if you have good credit).

Debt consolidation combines several credit accounts into a single payment on a new credit account. That can be either a balance transfer credit card or a consolidation loan. Note that both can be difficult to qualify for, so consolidation is usually better for people with higher credit scores.

Debt consolidation helps people get out of credit card debt without paying it all by drastically reducing interest costs. That may be by consolidating into a cheaper credit account or pausing interest for an extended period with a balance transfer credit card. Cards with a 0% introductory period will be the best option for those who have the cash flow to aggressively pay off their balances.

Debt Settlement

Best For: Paying back as little as possible.

Debt settlement is an agreement between a borrower and a lender in which the borrower pays off their debt for less than they owe. Usually, lenders will only agree to a settlement offer if they believe it’s the most they can expect to collect, so it’s not always an option. For-profit companies offer these programs, serve as the middle-man, and negotiate with each of a borrower’s lenders on their behalf.

Debt settlement programs will let people get out of credit card debt without paying back everything that they owe, but they’re not without their drawbacks. They require that the borrower stop making payments toward their debts to encourage their lenders to take a deal. Unfortunately, during that process:

  • The borrower’s credit will take damage due to the missed payments
  • Penalties and interest will continue to accrue and increase the size of the debt

There’s also no guarantee that lenders will accept a deal at the end of the negotiation, and even a successfully negotiated debt settlement will go on a borrower’s credit report It will stay there for seven years, which can cause almost as much damage as bankruptcy.

It’s also important to note that settling a debt generates taxable income on the portion that gets forgiven. For example, settling a $10,000 debt for $4,000 is the equivalent of getting an extra $6,000 of taxable income.

For those who have more credit card debt than they could ever pay back, debt settlement can be a viable option, but it’s not something to pursue lightly.

Watch Out For Scams

People who are struggling with debt are often desperate for a way out of their predicament. Unfortunately, scam artists like to take advantage of that desperation with false promises of an easy way out.

Debt settlement plans, in particular, are an easy way to make money off people with little effort. Even legitimate debt settlement plans take months to show results (if ever), which means that it’s not difficult for scammers to convince people that they’re helping them and take their money without providing anything of value.

To avoid becoming a victim of these scams, stay away from debt settlement providers who:

  • Ask for payment before settling any debts (it’s illegal)
  • Make any guarantees that they’ll be able to settle one or more debts
  • Promise anything that sounds too good to be true
  • Fail to explain the risks inherent in their services

Make sure to thoroughly research debt settlement providers before working with them, too. Checking out their reputation online doesn’t take much time or effort, but it can save people from a lot of heartache. The FTC, the Better Business Bureau, and consumer protection agencies are good places to start.

DIY Debt Settlement

Debt settlement plans don’t technically require the use of a third party. People who are willing to put in the extra work and research the process themselves can do everything that a service provider could do. They will often handle the process with more care than a professional would anyway, given their particular interest in the outcome. Additionally, creditors may often respond more positively to people who take the challenge on for themselves. 

That said, there are risks to attempting a debt management plan without help. Experts naturally have more experience with the process than the average citizen. Borrowers may also have difficulties seeing the process through to its end, especially given the sheer amount of work and time (up to several years) that goes into negotiating with creditors.


Best For: Getting a fresh start with debt.

Bankruptcy has a bad reputation that’s only partially warranted. It’s something to avoid, but it can also be a saving grace for people who are hopelessly entangled in debt and have no other recourse.

Two types of bankruptcy typically apply to consumers:

  • Chapter 7: Colloquially known as “liquidation bankruptcy,” Chapter 7 involves selling off someone’s nonessential assets and using the proceeds to pay off their unsecured debts. The courts will discharge any remaining balance after the proceeds are gone.
  • Chapter 13: Some people can’t qualify for Chapter 7 bankruptcy because their net incomes are too high. In these cases, Chapter 13 is the better option. It allows people with higher wages to work off their debts over a three to five-year plan. After the allotted time, the court will discharge any remaining debts, though there’s usually not much left.

Both types of bankruptcy can help someone get out of credit card debt without paying it all. Chapter 13 won’t always save the borrower as much money as Chapter 7, but it’s also less damaging to the borrower’s credit score.

Unlike debt settlement, canceling your debts via bankruptcy doesn’t generate any taxable income. It is a genuine fresh start with debt, even if it comes at a high cost.

Consider Working With an Expert

Whenever you’re making significant financial decisions, it’s worth consulting an expert. You don’t know what you don’t know, and one financial mistake can have repercussions that last for years.

Debt relief, in particular, can impact both your wallet and your credit score for years to come. Credit counseling is a helpful and affordable resource that can point you in the right direction. Reach out to a local provider to get free advice that can help you get out of credit card debt without paying it all or damaging your credit too much.