Need help with credit card debt over $10K? You have options

Debt in five-figure territory can be scary. A plan for dealing with it can give you the peace of mind and confidence boost you need to blaze forward with your financial goals. 

There’s no one-size-fits-all approach to $10,000 in debt. Let’s take a look at some strategies— from do-it-yourself options to hiring a professional.

How to get help when your credit card debt is over $10,000

There are three main approaches you can take when you’re looking for help with credit card debt over $10,000:

• Self-help

• Financial help

• Professional help

The type of help you decide on depends on your situation—and what you’re comfortable with. Let’s dive into the different options so you can decide what’s likely to be the best fit for your unique needs.

Self-help: DIY debt repayment programs

For those who want a do-it-yourself approach to debt reduction, a debt repayment strategy like the debt snowball or debt avalanche might work.

Most self-help debt repayment programs follow these steps:

• List all your debts, including current balances, minimum payments, and interest rates. You can do this with pen and paper, or you can use the Achieve GOOD app to get a complete view of all your debts.

• Figure out how much money you have left over each month after paying for necessary expenses. This will be your extra debt repayment amount.

• Decide how you want to order your debts. You might start with the smallest balance (debt snowball) or the largest interest rate (debt avalanche).

• Pay as much as you can toward the first debt on your list while you pay the minimum on the others.

• Once the first debt is paid off, you can start putting as much as possible toward the next debt on the list.

• Continue until you’ve paid each debt off.

Debt snowball vs. debt avalanche

The debt snowball lines you up for a quick win. You pay off your smallest debt first, giving you an early victory and‌ a morale boost. As you pay off your smaller balances and start focusing on the bigger ones, your payment grows (snowballs)—so even your large balances feel less intimidating.

With the debt avalanche, on the other hand, you might save more money in interest and pay off the debt a month or two quicker. By ordering debts so that you tackle the highest interest rate first, you’re getting rid of your more expensive debts first. It might take longer to get your first balance paid off, but there’s a bit of snowballing that happens here, too. Once you get going, more of each payment goes to the original amount borrowed, accelerating your payoff.

Financial help: debt consolidation

You can use a personal loan or a home equity loan to consolidate your debts. 

Debt consolidation means you use one bigger loan to pay off multiple smaller debts. The main reason people do this is that they can get a lower rate on the new loan (it wouldn’t make sense to pay off your debts with a more expensive debt). Another benefit is that it can be helpful to simplify your finances by reducing multiple payments down to one. Finally, the monthly loan payment might be smaller than the total of all the minimum payments you’re making on the smaller debts, and that can give you breathing room in your budget.

• Personal loan: If you have a fair credit score or better, you might be able to use a personal loan to pay off debt. Most personal loans are unsecured. That means you don’t have to own anything of value to borrow against. 

• Home equity loan: If you’re a homeowner and your home is worth more than you owe on it, you might be able to use a home equity loan to pay off your debts. The minimum loan amount may be higher than $10,000, so it’s a strategy to consider if you have higher debt, or if you also need to borrow money for another purpose. A home equity loan is secured by your home. If you are considering a home equity loan, make sure you can afford the monthly payments, so that you don't risk losing your home if you can't pay.

For both types of loans, the lender will verify that you have enough income to afford the monthly payment.

Professional help: a helping hand from the experts

Sometimes debt feels overwhelming, and it makes sense to turn to professionals for help. There are two types of help to look into for $10,000 in credit card debt—a debt management plan and debt resolution.

Debt resolution

Debt resolution means negotiating with your creditors to accept less than the amount you owe. Creditors may be willing to do this if you can show that you can’t afford to repay your debts in full. 

Anyone can negotiate their debts on their own. There’s nothing stopping you from calling your creditors and working out a deal. But some people aren’t comfortable doing so. Also, a reputable debt resolution company has relationships with creditors that may make negotiations more successful.

The company will set up a dedicated account that you can deposit money into each month. The amount you deposit is affordable, and often less than the minimum payments on your various debts. The company will then negotiate settlements with your creditors, one at a time. Once a settlement is reached, it's presented to you for your approval. If you agree, the settlement is paid out of your dedicated account. Only then are you charged a fee, and it’s paid from the same dedicated account. A reputable debt resolution company can take the stress out of your debt situation. You’ll feel better, knowing that you’re taking clear steps toward better financial health. And they take on responsibility for negotiations.

Debt resolution usually takes 2-4 years.

Debt management plan

An accredited nonprofit credit counseling agency can help you set up a plan to repay all of your debts in full. This is called a debt management plan (DMP). You'll generally need to agree to stop using credit while you’re in the plan. You’ll make a single monthly payment to your plan, and the agency will distribute the money to your creditors. 

Because credit counseling agencies are funded by creditors, they might be able to negotiate fee waivers or lower interest rates. However, this doesn’t make DMPs easier to complete. Because you’re paying off your debts in full, the monthly payment can be very high, and it's unrealistic for some people. Plus, most credit counselors charge a monthly fee for administering your debt management plan. 

DMPs usually take 3-5 years.