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How to Get Credit Card Debt Relief

Sarah Edwards | October 19, 2022

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

You can find relief from credit card debt.

Summary: Are you struggling with credit card debt and don't know how to find relief? Here's SoloSuit's guide on how how to free yourself from the chains of credit card debt.

It's a sunny day, and you go outside to check the mail. What's that evil-looking envelope in your mailbox? A letter from a creditor on an unpaid debt? Your day might not look so sunny anymore.

Jokes aside, credit card debt is a problem that people struggle with throughout the United States. The median average credit card debt is a staggering $3,706 per person, and everyday people with standard incomes struggle to repay it when they've got other expenses to deal with.

Home prices have soared across the nation, inflation has skyrocketed to 8.5%, and wages have stagnated. Families and individuals just trying to meet their basic costs of living often don't know how to begin resolving their debts.

However, getting out of debt can be a huge relief to those who make the effort to do so. Once debt is eliminated, no more money is wasted on interest, and you'll have more free cash flow that you can use towards retirement or investments.

What are the best options for getting out of debt?

The best option for paying down debt is to simply pay it off. There are two main strategies for doing so. One is snowballing, while the other is the high-interest method. Now, let's take a closer look at each method.

Use the snowball method to get out of debt

Under the snowballing method, you'll list all of your outstanding debts by the amount and minimum payments. Using the money you have available to pay down debt each month, you'll make minimum payments on all debts except the smallest debt.

You'll apply the balance of your money to this debt to pay it off first before moving on to the next smallest debt.

Snowballing example: Assume you have $500 in medical debt and a credit card debt of $1,500. The minimum payment on your medical debt is $50 per month. The credit card debt has a minimum payment of $100. You have $300 available to pay towards your debts.

You'll pay off the medical debt first since it's the smallest. Each month, you'll make a payment of $200 towards the medical bill and $100 towards the credit card debt. You'll have paid off the medical debt by the third month, so you'll be able to apply the full $300 towards your credit card debt afterward.

Use the high-interest method to get out of debt

Using the high-interest method, you'll pay off your debts according to which has the highest interest rate. You'll make minimum payments on all of the debts with the lower interest rates and put the most money towards the bills with the highest interest rates.

This method is great for reducing the interest expense you incur with credit cards and other types of debt.

High-interest example: Let's say you have three credit cards. One has a balance of $1,000 with 10% interest, the second has a balance of $2,000 with 15% interest, and the third has a balance of $3,000 with 5% interest. Each credit card has a minimum payment due of $50 per month, and you have $300 available to pay your bills.

To apply the high-interest rate method, you'll pay $200 per month towards the card with 15% interest and pay the minimums on the other two cards. Once you've managed to pay this bill off, you'll move on to the next one.

What about debt consolidation?

Debt consolidation is often touted as another way to get out of debt. This method involves obtaining a loan that you can use to pay off all of your debts at once. After you've repaid them, you'll make a single payment to the debt consolidation lender.

Debt consolidation loans are typically available to those who have decent credit scores. A good debt consolidation loan will have a low introductory interest rate for a certain period of time, usually between 6 months and one year.

If you have the means to repay your debts within the window, you'll be able to avoid any additional costs for interest and pay only on the balance of your debt. This can allow you to save hundreds of dollars in interest.

Is debt settlement an option?

Debt settlement is an option for those who want to get rid of debts at a fraction of the cost. However, it does come at a price. You'll typically take a hit on your credit score if you choose to use debt settlement.

You can try to settle your debts on your own, or you can use a debt settlement program. There are pros and cons to both.

First, settling debts on your own can be time-consuming. You'll need to do some research to find out the appropriate methods to use. SoloSuit has a whole blog devoted to this if you're interested in pursuing debt settlement on your own.

If you'd rather hand over your debts to a settlement program to perform the legwork for you, you can do so. They may be able to settle your debts for between 30 and 60% of their original value. However, you'll pay a fee for their services, which may be as high as 25%. There's also no guarantee that your creditors will accept a settlement.

Should I consider bankruptcy?

The final option for resolving your debt issues is bankruptcy. This should be considered a last resort, used only when you have no other options for getting out of debt. There are two types of bankruptcy: Chapter 7 and Chapter 13.

Individuals who meet certain income restrictions and have few or no assets can eliminate most debts without repaying them under a Chapter 7 bankruptcy.

A Chapter 13 bankruptcy is used by those who own property or have higher incomes to reduce the amount of debt that they owe. Not all debts will be completely forgiven, but some may be. Under this type of bankruptcy, the individual will usually be able to keep their personal home and vehicle.

What if I've been sued for debt?

If you've already been sued for the debt, you can file an Answer to the lawsuit and then begin the settlement negotiation process by sending a Debt Lawsuit Settlement Letter. Many debt collectors are willing to settle at a fraction of the original amount, because it's highly likely they purchased the debt for as little as 8% of the original amount. This means you could pay off 50% of your debt, and the debt collector would still make a huge profit. The trick is to negotiate an agreement that's ideal for you and financial circumstances.

To learn more about how to negotiate a settlement that works best for you, check out this video:

SoloSuit can help you make a Debt Lawsuit Settlement Letter in minutes.

SoloSuit can help

SoloSuit is a web application that uses proprietary technology to help individuals who are being sued for a debt.

After answering a few simple questions, you'll be able to download a PDF document that can be used to file a response to a summons for a debt in your local court. There is also a paid option available for individuals who want an attorney review of their document.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

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Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

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If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Bankruptcy

Bankruptcy is a great way to legally resolve debt, but it's usually best to consider it as a last resort. Here are some bankruptcy guides to help you decide which debt resolution option is best for you.

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Don’t have time to go to your local courthouse to check the status of your case? We’ve created state guides on how to check the status of your case throughout the US, complete with online search tools and court directories.

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Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt, along with other credit-related resources.

Debt collection FAQs

Find answers to some of our the most commonly-asked questions about debt collection below.

Debt collection documents and templates

If you're dealing with debt, these documents and templates will help you respond, protect your rights, negotiate, and resolve your debts.

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Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created state guides on debt settlement. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

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Legal aid

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Medical debt

Having a health challenge is stressful, but dealing with medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Personal finance

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State debt collection laws

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt

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Stop collection calls

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Wage garnishment

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in your state, plus other wage garnishment resources.

The Debt Hotline

Hosted by Team Solo, The Debt Hotline breaks down debt and personal finance topics with help from attorneys, financial experts, and industry pros. We respond to real questions to help you navigate debt with knowledge and courage.

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