I’ve Got Credit Card Debt Has Built Up After Making Some Mistakes. What Should I Do?


Dear Steve,

I childishly made some large purchases using my credit, and couldn’t afford to complete the payments on a timely manner. Most of those accounts are closed.

Is it best to pay them off in full or with a settlement payment? Also, paying that amount (full or settlement amount) as a one time full payment or monthly amounts; will either help rebuild my credit?



Dear MonieMoney,

If you wanted to rate which efforts would help you the most, paying the accounts off in full would do the trick.

After that, settling the debt for less than you owe or bankruptcy can fall into the same general bucket.

When you settle a debt for less than the full balance the amount of debt forgiven will be reported as a bad debt and appear on your credit report for up to seven years from the start of the last stretch you went delinquent.

A bankruptcy will close the delinquent debt and a chapter 7 bankruptcy can be reported for up to ten years.

But the length of time it is reported is less important than how aggressively you work to rebuild your credit following either debt settlement or bankruptcy.

Once you settled all your debt debt or received your bankruptcy discharge, the ability to have good credit again is within your reach. Just read this guide.

Depending on how much debt you are talking about, it can be faster and less expensive to file bankruptcy, take what you learned from your mistakes, and start over.

If you want to compare the various get out of debt options then just use my online get out of debt calculator.

As far as I’m concerned, you screwed up, learned from the mistake, and now need to move forward in a rational and logical way. That means not making decisions based on emotion, but fact. You might want to read this and this to help you on your decision path.

Maybe this post will really hit home for you – How to Get Out of Debt. The Honest and Unvarnished Truth.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.