You won't pay down your debt any faster if you view it as a form of punishment. So reward yourself when you reach debt payoff goals. "The only way to completely pay off your credit card debt is to keep at it, and to do that, you must keep yourself motivated," Bakke writes. Just make sure to reward yourself within reason. For example, instead of a weeklong vacation, plan a weekend camping trip. "If you aim to reduce your credit card debt from $10,000 to $5,000 in two months," Bakke writes, "give yourself more than a pat on the back when you do it." 
If your credit card interest rates are so high it feels almost impossible to make headway on your balances, it’s worth calling your card issuer to negotiate. Believe it or not, asking for lower interest rates is actually quite commonplace. And if you have a solid history of paying your bills on time, there’s a good possibility of getting a lower interest rate.

5 A 0.25% interest rate reduction off the standard rate of a consumer line of credit is available if the payment is automatically deducted from a SunTrust checking, savings or money market account using SurePay. For the SunTrust Equity Line, this interest rate reduction does not apply to promotional rate advances, Fixed Rate/Fixed Term advances, or during the Repayment Period. All line discount offers are subject to change. Offer for new and refinanced eligible consumer loans and lines of credit, as well as for credit line increases. A relationship discount is not available on existing consumer loans or lines of credit. Relationship pricing discounts may not be applicable for all products. Consult your banker for details.
If I’m hopelessly behind, debt settlement or bankruptcy are my only options, right? It depends on your circumstances. Did you lose your job? Call your creditors; they may grant you forbearance — that is, they may reduce or suspend your payments for a while. … Meanwhile, contact a nonprofit credit counseling service to help you get reorganized, and to go to bat on your behalf.
Different debt markets have somewhat different conventions in terminology and calculations for income-related metrics. For example, in mortgage lending in the United States, a debt-to-income ratio typically includes the cost of mortgage payments as well as insurance and property tax, divided by a consumer's monthly income. A "front-end ratio" of 28% or below, together with a "back-end ratio" (including required payments on non-housing debt as well) of 36% or below is also required to be eligible for a conforming loan.
Debt settlement: In a debt settlement program your interest rate and principal balance is reduced to make the owed amount affordable to pay off. The professional debt arbitrators negotiate with the creditors when you sign up with a debt settlement company. The financial experts help to lower the principal balance along with the interest rate and design a perfect repayment plan for you. Make sure you do not miss a single monthly repayment until the debt is completely paid off.

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What is the best site to use in your job search? Looking for a job can be a stressful and tedious process. Ensuring you get your credentials out to as many employers as possible is important. It's also crucial that job seekers find all the applicable openings, so they don't miss out on any opportunities. The ability to upload and save a resume to a site has even made it so that recruiters can find you, rather than waiting for you to apply for the position.
I do all of these and a lot more. For instance, I don’t turn on my heat except when I have no choice. Helps that I live in a townhouse between two others. I wear extra layers and spend more time upstairs rather than down. I wash/dry clothes once a week. I even wear all light or all dark colors to cut down on loads. I only go out to eat maybe once a month or not at all. If I do I choose less expensive items or go ala carte and always water. I don’t do any unnecessary driving. I’ve carried the same Coach leather purse, a Christmas gift, for the last 10 years.
Instead — at the risk of sounding like a broken record (which we can safely say again, now that vinyl is back) — consult with a nonprofit credit counseling company. Your counselor and his/her team of experts will arrange terms with your lenders for paying off your debt; meanwhile, in most cases, they’ll help you into a plan that consolidates all your unsecured debt into a single, manageable monthly payment.
If you are considering asking a friend or family member for help with money, you should be willing to sit down with them, share your budget, debts, monthly payments and interest rates with them. Show them that you can afford to pay them back and how you plan to do that, including highlighting budget areas that you have already cut back or are willing to cut back.
The most effective way to pay down debt is to focus on accounts with the highest interest rate which is known as the debt avalanche method or debt stacking. However, many people like to focus on accounts with the smallest balance first, also known as the debt snowball. You can simulate both methods with the form below to see which one works best for you.

The company negotiates on behalf of indebted consumers who are experiencing a financial hardship with the goal of avoiding bankruptcy (Chapter 7 or Chapter 13) by settling their unsecured debt at a discount to what is actually owed. The company primarily serves consumers where debt consolidation or home refinancing is undesirable or an unavailable option. They also serve those who cannot afford either their credit card minimum payments or the payments required in credit counseling.[3]

You won't pay down your debt any faster if you view it as a form of punishment. So reward yourself when you reach debt payoff goals. "The only way to completely pay off your credit card debt is to keep at it, and to do that, you must keep yourself motivated," Bakke writes. Just make sure to reward yourself within reason. For example, instead of a weeklong vacation, plan a weekend camping trip. "If you aim to reduce your credit card debt from $10,000 to $5,000 in two months," Bakke writes, "give yourself more than a pat on the back when you do it." 
If you focus on paying off low interest debt first because it has a smaller balance, you'll take much longer to repay high interest debt than you would if you'd begun putting your extra cash towards that high interest loan. In some cases, it could take you years to pay off your low balance debts at low interest before you finally begin aggressively repaying high interest debt. This could result in substantial additional interest being paid.
Jennifer Brozic is a personal finance writer and has written for Citi. Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors' opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted. Read our Editorial Guidelines to learn more about our team.

Two: Pay off your lowest balance: Need a mental win? Work on the card with the lowest balance to give you the psychological boost of accomplishing debt repayment. You’ll feel good seeing results quickly and be motivated to tackle the next credit card. If you have two debts with similar balances, then pay off the debt with the higher interest rate first.


During the course of our study on average credit card debt, we observed some significant differences among different demographics and regions. The most prominent differences exist among peoples of different race, age, gender, and state of residence. In the following sections we explore these differences to see how average credit card debt varies among the population.
The Federal Reserve says that the average household debt is up to $132,529 (including mortgages) a jump of 11% in the past decade. Credit card debt and auto loans are climbing over the $1 trillion mark. Student-loan debt has hit a staggering $1.3 trillion with 44.7 million borrowers, who owe an average of $37,172. That figure alone is up 186% in the past decade!

Thank you for giving us your honest feedback, Sarah. We empathize with your frustrations, and we are very sorry about your current experience with our company. That's why we need to speak with you so we can resolve your concerns. One of our experienced team members will be reaching out to you shortly. Thank you for choosing Freedom Debt Relief to meet your financial needs!
The company offers gracious payment options. There is no penalty for any pre-payment and you have a 15-day period to make your monthly payment before receiving late charges. Moreover, the site promises fixed rates, meaning your payment will not increase, and the company provides information explaining how consolidating credit card debt will improve your credit score, encouraging clients to circle the date they will be debt free.

Thank you for the informative article, I really enjoyed reading it. My husband and I both have very poor credit scores. No credit cards or credit card debt, but various past accounts that have gone to collections ranging from cable and phone bills to a storage facility. For the last year we have been living with my parents to save money so we can buy a house. With our recently received tax return, and the money we’ve saved so far, we’d like to pay off everything at once. A clean slate if you will. How do we go about doing this? Is this a good idea? Will our credit scores go up?


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You need to work to get credit card utilization down below 30% (below 10% would be even better). But high utilization alone should not have brought your score down quite so low. Here’s how to get your free credit score along with a personalized plan for improving it. Because the scores come from information in your credit reports, you should also check those for errors and dispute any information that is inaccurate. Here’s how to get your free annual credit reports.
I struggled with this at first too, because the right answer feels so wrong! But believe it or not, you save more money by paying off the higher rate. Even though it’s growing less per day, it’s growing at a higher percentage in relation to its principal. This means that it’s making your overall repayment more expensive at a faster rate than any loan with a lower interest rate.
hi. if they are over 7 yrs old dont worry about them. in addition, some companies will sell the debt to 3rd party collectors to try to collect even will attempt to threaten or scare you to pay. let it go. if it is student loans etc, pay those with a consolidation contract (not loan) with the federal student loan org……Fedloan.org. they will work with you.

It may not make sense but that is the way it’s factored into your credit score, which is the end result here. Cutting up the card to avoid using it may help if it’s a temptation. The scores are comprised of debt to income ratio, but also credit worthiness and longevity, among many other things. If you have $100k in open to buy credit, and only $5k in debt, that helps your score. Also, it shows that lenders have extended this amount of credit to you. i.e. Creditworthiness. Additionally, your score factors in length of credit. They want to see how long you’ve kept that credit, expecting a good relationship with the lender and you’ve shown responsibility. Old schoolers used to close the accts and be done with it. This is the new way of the credit score. It is an education in itself.


Debt relief programs at ACCC are designed to help you take control of your finances and make a plan to pay off your debts. In your first conversation with our expert credit counselors, we'll evaluate your financial situation to get a clear picture of what you owe and how best to pay it off. Then we'll work with you to create a workable budget – something you can live with, but one that will help you make significant progress toward your goal of being debt-free.
Besides these more formal debts, private individuals also lend informally to other people, mostly relatives or friends. One reason for such informal debts is that many people, in particular those who are poor, have no access to affordable credit. Such debts can cause problems when they are not paid back according to expectations of the lending household. In 2011, 8 percent of people in the European Union reported their households has been in arrears, that is, unable to pay as scheduled "payments related to informal loans from friends or relatives not living in your household".[13]
Do you use credit cards to “get by” when you don’t have enough cash?Narrator: People often use credit cards to make ends meet when they have a limited cash flow. But that can lead to problems with DEBT Narrator: High interest rates on credit cards can double the cost of items if you’re only paying the minimum amount due each month. Renee amassed over $19,000 in credit card debt Narrator: For Renee, getting by on credit cards during graduate school put her on a treadmill of debt. Her credit card interest rates were between 15-20% Narrator: She was shelling out over $1,200 a month to her creditors, but getting nowhere fast 'On-screen quote from Renee' “I talked to a few companies first. Consolidated Credit stood out because I was still in control of my finances.” Narrator: Luckily, Renee found Consolidated Credit and enrolled in a debt management program. Debt Management Program: Before $1,200 per month; After $500 per month! Narrator: The program reduced her total monthly payments by almost 60 percent. 'On-screen quote from Renee' “The experience of living without credit cards really changed my mindset. It changed how I budget and spend my money now. Narrator: The monthly savings meant she didn’t need credit cards to get by anymore, because her budget was balanced. After her interest rates were reduced to 1%, Renee was debt free in 4 years! Narrator: And she could use part of that monthly savings to save up for a new house. Renee had this to say in closing: 'On-screen quote from Renee' It was a great feeling that I was no longer using credit to get by. If you feel like you’re barely keeping your head above water, pay your credit cards off. And there’s nothing wrong with asking for help!
A company may also issue bonds, which are debt securities. Bonds have a fixed lifetime, usually a number of years; with long-term bonds, lasting over 30 years, being less common. At the end of the bond's life the money should be repaid in full. Interest may be added to the end payment, or can be paid in regular installments (known as coupons) during the life of the bond.

The point about monthly payments to loan lifetime is an interesting one. It won’t change the strategy, though, believe it or not. Leaving the $3,000 loan aside for now… as a general rule (like if the 3K loan were a student loan, for example) you will still want to pay toward the highest interest account first. Otherwise, by working to “free up” money on a loan with a lower rate, you (at the same time) wouldn’t be putting that available money to the higher rate, which is why it doesn’t help you in the long-term. It’s an issue of opportunity cost (ie what are you sacrificing when you direct those funds away from the high interest account?). The answer is that you are sacrificing the ability to put money toward your high interest debt now in order to do it later, which doesn’t help your cause. The tough thing is that you’d want the lowest monthly payment possible on the lower interest rate loans. In a perfect world, we’d be able to adjust those according to maximize efficiency, but unfortunately I don’t think many lenders will negotiate that point.
The more money you put toward your debt, the faster you can pay off your debt for good. If you don’t already have one, create a monthly budget to better manage your money. Seeing all your expenses detailed in a budget can also help you figure out how you could cut out some expenses and use that money for your debt. You may also be able to come up with extra money for debt by selling things from your home or generating income from a hobby.
Effect on Credit: Using a debt management program may damage your credit. Your service provider will negotiate with lenders, and you’ll probably end up paying less than you were supposed to pay each month. As a result, your credit scores may fall. If you had perfect credit before a consolidation program, you’ll definitely notice the hit. If you were missing payments and paying late anyway, the effect may be modest.
We found the blog articles very helpful. With topics ranging from selecting health insurance to saving money on groceries, a person seeking financial security could benefit from the wisdom these articles offer. Unfortunately, this tool is found at the bottom of the Home page. The website would function more effectively if they included this option at the top of the page along with "Contact" and "Team" information because it is on these pages where we found answers to our initial questions.

If you do a lot of online shopping at one retailer, you may have stored your credit card information on the site to make the checkout process easier. But that also makes it easier to charge items you don't need. So clear that information. "If you're paying for a recurring service, use a debit card issued from a major credit card service linked to your checking account," Hamm writes. 
I always suggest starting with credit counseling because it is the lowest risk option, but I am biased too (my salary comes from a credit counseling agency). I would suggest checking out credit counseling agencies with the Better Business Bureau and talking with the two highest rated. If either one gives you no options other than a debt management plan you can be sure that you have a bad counselor. Listen to the options presented by good counselors, which should include self-management and bankruptcy and then decide on your plan of action.
Escalate your request and negotiations if the initial customer service representative cannot or will not negotiate. A supervisor may be able to make this decision instead. If the representative accepts your offer, ask for a confirmation letter to outline the details of your agreement. If the representative declines your offer, end the call and move to the next phase of your plan – writing a letter.
Filing for personal bankruptcy usually won’t erase child support, alimony, fines, taxes, and most student loan obligations, unless you can prove undue hardship. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually doesn’t allow you to keep property when your creditor has an unpaid mortgage or security lien on it.
DIY: Call the credit card companies, explain that you want to concentrate on paying off your debts, and ask if they will reduce the interest rate for you. Some may. Then pay your creditors with the same system: Determine a fixed amount you can send every month, and stop charging. As one account is paid off, pay more to the others until you're debt-free.
It is important to remember that this part is usually for free. However, after the initial consultation, you will be given a quotation so the company can work on your debts. Be wise in selecting the debt reduction service that you will avail. No upfront fees should be charged and there should be evidence of guaranteed results before you pay for any service. In fact, there are government agencies that offer free counseling services.
Another major change to the bankruptcy laws involves certain hurdles that you must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.
We tested a variety of hypotheses and ultimately determined that it is not the size of the repayment or how little is left on a card after a payment that has the biggest impact on people’s perception of progress; rather it’s what portion of the balance they succeed in paying off. Thus focusing on paying down the account with the smallest balance tends to have the most powerful effect on people’s sense of progress – and therefore their motivation to continue paying down their debts.[7]
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One of the biggest pitfalls of debt consolidation is the risk of running up new debt before the consolidated debt is paid off. When you finish paying off credit cards with a consolidation loan, don’t be tempted to use the credit cards with their newly free credit limits. If you think you might, close the accounts. You may have heard that doing so could hurt your credit score, and it might. But you can recover from credit score damage much more easily and quickly than you can recover from crushing debt.

If you have more than enough to pay for the minimum, choose target debts that you can increase payments. Ideally, these should be the high interest credit cards that you owe but a lot of experts will suggest that you work on those with the lowest balance first. It will encourage you to pay off the rest once you complete one or two of them. When you have finished off some of your debts, only then can you work on the high interest rate cards.
Everyone’s situation is different. You should do your research and decide based on your unique situation.  You may want to consider other debt relief options, including credit counseling. A credit counselor is trained to understand your financial situation and help you figure out how best to manage your debt. You may also want to learn about other debt relief options.
When you say “released” I assume that is when the dentist gave up attempting to collect and then sold the debt to a third-party. In other words, it sounds like they didn’t “hire” a collection agency but instead “sold” your debt to them. I could be wrong, but either way it sounds like there is some sort of contractual arrangement between them and the collector that prevents them from dealing with you until this is paid. I’m not sure why they haven’t tried to contact you, and that does seem very odd. If you’re in a position to repay the debt, I would strongly encourage you to get this all in writing from your dentist first and document your correspondence with the collectors as well.
Hi Tamara! It’s great that you’re really starting to get a handle on this. I’d strongly suggest paying your debt using the avalanche/ladder method described in this post to minimize the amount of interest you’re paying. If you’d like help building a plan, you should schedule a free budgeting call with one of our credit counselors. Good luck getting rid of this debt!
You can settle the debts yourself or hire a debt settlement company. These companies negotiate with each creditor to reduce the amount owed. The settlement company will likely tell you not to pay your creditors but put that money in a trust account. When the funds reach the total needed to settle the debts, the creditors are paid. Until that happens, interest and late fees build up. While the debt settlement company may have attorneys on staff, they work for the company, not for you.
Debt settlement companies can’t collect a fee until they’ve reached a settlement agreement, you’ve agreed to the settlement, and you’ve made at least one payment to the creditor or debt collector as a result of the agreement. But you could still end up paying a portion of the debt settlement company’s full fees on the rest of your unsettled debts, says Bruce McClary, vice president of public relations and communications at the National Federation for Credit Counseling.
I applied at my bank and at a credit union and both declined me. My credit score was provided with a fair rating but then the reason was that the amount of debt between us was too high, roughly 10k. Therefore they wanted to see more effort put in first. We were told to reapply again in a few months time when we had that under control. My payments were always on time and so I dont know how I am suppose to show effort if that amount of debt is always going to be the same due to interest. Hope that made sense.
Traditions in some cultures demand that debt be forgiven on a regular (often annual[citation needed]) basis, in order to prevent systemic inequities between groups in society, or anyone becoming a specialist in holding debt and coercing repayment. An example is the Biblical Jubilee year, described in the Book of Leviticus.[18] Similarly, in Deuteronomy chapter 15 and verse 1 states that debts be forgiven after seven years.
You must also owe more than $7500 and be several months behind in your payments. This is because if you owe less than this and are only a month or two behind on your bills your creditors will have no incentive to negotiate. At this stage they would rather keep harassing you with the hope that they will ultimately be able to collect the full amount of the your debts.
Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary by state. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.
Before you consider applying for a loan, one option is to use a debt management plan to consolidate your monthly debt payments. With a plan like this, you must first find a credit counselor and work with them to formulate and stick to a repayment plan. Once you and your counselor agree on a plan, they will often try to negotiate with your creditors to see if they can get you a lower monthly payment and sometimes a lower interest rate.
*Clients who make all their monthly program deposits pay approximately 70-75% of their original enrolled debts over 24 to 60 months. Not all clients are able to complete their program for various reasons, including their ability to save sufficient funds. Our estimates are based on prior results, which will vary depending on your specific enrolled creditors and your individual program terms. We do not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Our service is not available in all states and our fees may vary from state to state. Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution. Read and understand all program materials prior to enrollment. The use of debt settlement services will likely adversely affect your creditworthiness, may result in you being subject to collections or being sued by creditors or collectors and may increase the outstanding balances of your enrolled accounts due to the accrual of fees and interest. However, negotiated settlements we obtain on your behalf resolve the entire account, including all accrued fees and interest. C.P.D. Reg. No. T.S.12-03825.
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