How Can I Eliminate my Credit Card Debt Legally?

Burdened with crushing debt they can’t pay, consumers ask “how to erase my credit card debt legally” When you walk away from debt without paying, you violate the terms you agreed to in a legal contract when you opened your credit card account.

Technically, it is illegal to fail to pay your credit debt but it doesn’t become illegal until a court declares you are in violation of the agreement. Today, we do not have debtor’s prisons and you will not be handcuffed and carted off to jail for failure to pay your credit card bills.

However, the way in which you eliminate your debt can have a great impact on your credit file and your credit rating. The only way to eliminate credit card debt legally without an impact on your credit score is to pay off the balance in full as agreed.

When You Can’t Pay Your Credit Card Debt

Your personal budget comes down to necessity and priorities if you have lost income or have accumulated more debt than you have the ability to pay. You must have a place to live and food to eat. Your children must have school supplies and clothing to wear. You have to keep your car and pay for gas.

If you have lost your job or had your hours and income reduced or have suffered a financial crisis due to an accident or medical emergency, paying your debt may be at the bottom of your list of priorities.

Consolidation May be an Option

If the problem is high APR on your cards and total monthly payments that are more than you can handle, a consolidation loan may be in order. You can eliminate your credit debt legally with consolidation of all your debt into one loan.

That loan would be for a specific term of months or years and would have a lower (usually much lower) interest rate. You would use the loan to pay off the total debt you owe and then repay the loan at more favorable terms.

This option is the least damaging to your credit as it only reflects one new loan and over the next few months your credit cards will clearly show 0 balances which is a positive for credit agencies.

It avoids having your credit cards shown as closed by the lender as that happens only when you have problems paying your debt.

Negotiated Settlement

Can I eliminate my credit card debt legally by negotiating with my lenders? For some of us, the answer is yes. If you owe a lender $2000 and can show him that you do not have the ability to keep making the monthly payments, that lender may eventually be willing to accept a lesser payment and mark the account as paid in full.

This negotiation may take weeks or months to reach a settlement as lenders are not willing to accept less than the amount due until they are satisfied it is the best option for them.

A payment of $1000 on a debt of $2000 is preferable to having to write off the entire debt as “uncollectible” or having it dismissed through bankruptcy.

Caution for Consumers

The areas of consolidation and negotiated settlements with credit lenders are filled with scams and empty promises by fly by night companies who aim to profit from your financial problems.

Be very cautious about any company requesting payment up front for services claimed to eliminate your debt and check consumer ratings of the companies carefully. Falling prey to scam companies who make big promises can make your financial problems even worse!

Personal Bankruptcy

Bankruptcy laws were designed to those with other debts they cannot pay. When you file for bankruptcy you are stating you are not able to pay your debt.

Bankruptcy is a chance to start over with a clean slate. However, the clean slate does not include your credit file as bankruptcy will damage your credit for up to ten full years.

Even so, it may be the best option to crush your debt legally as the balances on your cards is totally eliminated by the bankruptcy court.


You can erase debt legally and should try every option open to you before taking the final step of filing for bankruptcy. There are no easy answers but there are options to help you.