-
Step 1
Write down a list of all your credit card debt, interest rates and current minimum payments. Also make a note of how much money you are spending a month on credit card repayment, entertainment and food.
-
Step 2
Look for areas in which you can cut down your spending, even if only by a few dollars per month. Popular ways to add more money toward paying off credit card debt include reducing movies and dinners out and purchases such as daily coffee.
-
Step 3
Visit a debt reduction calculator website (see Resources section) and enter the information for each card you have. Play with the numbers, seeing how adding just $5 a month to one credit card payment can really save you years and hundreds, even thousands, of dollars when it comes to paying off your debt. Make a plan, even for one card, and stick to it.
-
Step 4
Call your lender(s) if you feel you are beyond the help of using a debt-reduction calculator. Ask to be placed into a hardship program, but realize this will mean your card will be cut off--maybe even permanently. Most lenders will at least try to work with you and cut down the minimum payments and interest rates, but it may take persistent phone calls to get someone to help you. Realize you might not qualify for a hardship program unless you are already late on the account.
-
Step 5
Call a credit counseling agency (see Resources section) if you feel you are in serious financial trouble and cannot get into a suitable lender hardship program. It may be able to get you into its debt repayment program, in which they negotiate with your creditors and administer all your payments for a monthly fee. However, keep in mind that some lenders see credit counseling as equivalent to bankruptcy and that you must do plenty of research to make sure your credit counseling firm is one of the honest businesses.
-
Step 6
Consider Chapter 13 bankruptcy (see Resources section) as a last resort. You will likely be out of credit card debt in 2 to 5 years and pay less than you owe in most cases, but bankruptcy is a serious financial decision that will follow you around for at least 7 years. You also must get credit counseling before and right near the end of your case.
