7. Make more money
If you're very determined to pay off that debt within the year, you should look for ways to increase your income and use that extra money to pay off debt as quickly as possible. Whether it's taking on a part-time job or negotiating a raise with your boss, think of some ways to start earning more money for at least a few months and make debt elimination a high priority.
8. Do a credit card balance transfer
Most of us typically tear up all those credit card balance transfers that arrive in our mailboxes. But if you want to go on a tear with your debt reduction efforts, a balance transfer can help. By transferring high rate debt to a zero percent deal — one that lasts for 12 months or so — you eliminate all credit-card interest. That frees up cash flow, giving you additional money to knock out those credit card bills. Just read the fine print before signing up to make sure you are really getting that low rate.
9. Use a statute of limitations law to eliminate old debt
Some people pay off old credit card debts — really old ones — even when they're no longer legally obligated to do so. We all want to repay our bills. But if times are especially tight and you just don't have the money, you should focus on current debts and consider forgoing repayment of old bills that are 7 to 10 years old, or even older.
Each state has its own set of rules regarding outstanding debts. Some states don't allow a debt collector to collect a certain type of debt after a certain period of time; others limit the amount of time when a creditor can sue you over an old debt. Either way, you should find out whether the statute of limitations has passed regarding an old debt you may owe. If it has passed, you can likely forgo repayment without worrying about financial, legal or credit consequences plaguing you.
For more information about dealing with old debts, contact your state Attorney General or the consumer protection agency for help and advice regarding your state's statute of limitations on credit card debt.
10. File bankruptcy to discharge your credit card debts
Bankruptcy should only be used as a last-ditch option to rid yourself of debt. But under extreme circumstances — as when you have no income or you have completely unmanageable credit card payments or medical bills — a Chapter 7 bankruptcy filing is appropriate to discharge credit card bills in their entirety.
If you feel morally obligated to repay your debts, you can also look into Chapter 13, which reduces some of your credit card bills. Then you repay the remaining debt over a three- to-five year period.
Also of Interest
- 99 ways to save money on everything
- Things flight attendants wish they could say to you but can't
- Sharpen your memory and problem-solving skills with our FREE Brain Games!
Join AARP Today — Receive access to exclusive information, benefits and discounts