In all likelihood you cannot settle credit card debt unless it is delinquent. Typically credit card issuing companies settle debts simply because they think you cannot or would not pay. To arrive at that point, you’d need to stop making payment on your credit card bills.  This will certainly bust up your credit score, incur penalties and lead to collection calls.

Debt settlement’s impact on your credit score is almost every bit as severe as a bankruptcy. For more information, read my other article, “How Will Debt Settlement Affect my Credit Report?“

Since I do not know your exact financial position, I cannot advise if debt settlement is best for you. However, I suggest that you contact a CareOne Certified Credit Counselor that will evaluate your state of affairs and formulate an action plan. Credit counseling ought to be free or inexpensive and doesn’t affect your credit score.

You might qualify for Debt Management. In a Debt Management, your counselor would work out an agreement with your creditors.  Under Debt Management, you make a single payment each month to the debt management agency. The agency then dispenses this money to your creditors. It generally takes 36 to 60 months to fully pay off all your debts. It may be possible that your credit card issuers may bring down your interest rates. It is also likely that your credit cards will be closed or suspended. Nevertheless, since your accounts with your creditors are not delinquent, most creditors will report that you have “Paid as agreed”.

If you decide to do it yourself without the help of a counselor, try to first pay down the balance with the highest rate of interest. Once that account is paid off, then focus on the balance with the next highest interest rate and so on, until your debts are completely paid off.  Another strategy calls for paying down the lowest balance first and working your way upwards, so that debts are wiped out faster. With the second strategy, it may take a little longer to get out of debt, but it makes your debt seem shorter and fatter, consequently raises your motivation and feelings of success.

On the other hand, if you have a large debt amount at a high rate (say 30%), it may still take you more than 10 years to repay because the interest rate is ridiculously high.  If you feel that a creditor is ripping you off, and wishes to negotiate your debt, then do it the right way. (Read my other article, “How Will Debt Settlement Affect my Credit Report?”)