Overwhelmed by Credit Card Debt? Your Map to Financial Freedom Starts Here.
If you’re reading this, you’re likely one of the millions of people asking: “How do I get out of this credit card debt, and where do I go for help?”
It’s an overwhelming feeling, like free-falling without a safety net. The good news? You are absolutely not alone, and there is a safe landing spot. As certified financial counselors, we hear these questions every single day, and they usually boil down to three key areas.
1. The Most Common Questions We Hear
Is my debt too much?
We often talk to people who fear they’ve crossed some invisible line. The reality is, “too much” debt isn’t defined by a dollar amount, but by its impact on your life. If your minimum payments are eating up your budget, causing you to avoid phone calls, or making you choose between groceries and a payment, then it’s time to act. It’s too much when it controls you.
What’s the best way to pay this off: Snowball or Avalanche?
These are the two most popular DIY (Do-It-Yourself) debt payoff methods:
- The Debt Snowball: You focus on paying off the smallest balance first, regardless of the interest rate. Once it’s paid, you roll that payment amount into the next smallest debt. This method is great for motivational wins and building momentum.
- The Debt Avalanche: You focus on paying off the debt with the highest interest rate (APR) first. This is the most mathematically efficient method because it saves you the most money in interest charges over time.
Choosing the right method depends on your personality, but remember, any plan you can stick to is the right plan.
Should I consolidate my debt?
Debt consolidation—taking out a new loan to pay off old ones—is a great strategy if you can secure a lower interest rate. It simplifies your payments into one fixed monthly bill. However, if your credit history is shaky, consolidation loans may still come with high rates. This is where professional counseling can provide a safer, more effective alternative.
2. Your Safest Landing: Choosing the Right Help
When debt feels insurmountable, the search for help can lead you down two very different paths. It is crucial to know the difference between proven, consumer-first guidance (like ours) and riskier, for-profit promises.
Option 1: Nonprofit Credit Counseling (The Parachute Approach)
This is your safest, most educational, and credit-preserving path.
- What it is: A meeting with a Certified Financial Counselor (free of charge) who reviews your entire financial picture, helps you build a sustainable budget, and explains all your options.
- The Debt Management Plan (DMP): If you qualify, your counselor can enroll you in a DMP. This program allows you to combine all your eligible unsecured debts (like credit cards and personal loans) into one manageable monthly payment. We negotiate with your creditors to potentially lower your interest rates, allowing you to pay off your debt in full, typically within five years or less.
- Why it works: It pays your debt in full, preserves your credit score better than other options, and most importantly, it comes with the financial education you need to stay debt-free for life.
Option 2: Debt Settlement (The Risky Route)
We generally advise extreme caution with for-profit debt settlement companies.
- What it is: A third-party company advises you to stop paying your creditors and instead save money into an escrow account. They then try to negotiate a settlement—a lump sum payment that is less than your total debt.
- The Risks:
- Credit Damage: Stopping payments severely damages your credit score.
- Fees and Interest: Interest, late fees, and collection calls continue until a settlement is reached, potentially taking years.
- Taxes: Forgiven debt is often considered taxable income by the IRS, leading to a surprise tax bill.
- Lawsuits: Creditors may sue you for non-payment before a settlement is ever negotiated.
| Feature | Nonprofit Credit Counseling (DMP) | Debt Settlement (For-Profit) |
| Focus | Education & Repayment in full | Negotiation & Debt reduction |
| Interest | Works to lower your APR | Interest & fees accumulate |
| Credit Score | Less damage; helps recovery | Severe damage |
| Payment Status | Requires on-time payment | Requires stopping payments |
Your First Step Today: Take the Jump
You don’t have to navigate this journey alone! The fear comes from not having a plan, and the stress comes from the mounting interest.
At Parachute Credit Counseling, our goal is to give you a clear, safe, and personalized path to debt freedom.
Ready to find out if a Debt Management Plan is right for you?
GET STARTED HERE