Should I Close My Credit Cards and Freeze My Credit? – Bea


Dear Steve,

I have a small combined debt of probably $5k or less (old phone bill, old credit card debt, etc.).

I believe it’s best to simply pay off the total debts I owe instead of dealing with collection agencies. Is this the best way? Can collection agencies come and sue me?

Should I use consolidation to pay everything?

Also, I plan on never using credit again which means I’m really considering freezing my credit reports or whatever it is I must do and simply using cash once I start working and starting a new service business. Suggestions?



Dear Bea,

I certainly understand where you are coming from but I’d like to offer an alternative point of view.

Paying off old debt can be done by making at least the minimum payment and as one account is paid off, move that minimum payment to either the next lowest balance account or the highest interest rate account. Either strategy has pros and cons. But here is a previous article that contains step-by-step advice on how to pay off your debt.

Considering you are looking forward to starting a new business, it is possible you may need the benefits of good credit in the future. At the present time your debt equals pain for you so the natural reaction is to just not get into debt in the future. And that’s a good strategy but going into debt and best using credit are two completely different issues.

You can continue to leave open your oldest credit card, use it as needed for the business, and pay the balance off each month. A credit card is the safest way to pay for goods and services. Personally I never use a debit card so I can avoid anyone reaching directly into my bank account.

Freezing your credit report is a strategy. It prevents people from accessing your credit report without you unlocking the report. If someone has been a victim of identity theft then a credit report freeze might be an very valuable resource.

See also  How in the World Do We Even Start to Get Out of Debt?

However, if you have not been a victim of such activities, just keep in mind a freeze on your credit can create some inconveniences for you.

To better understand how a credit freeze might impact you, here is an excellent article to read.

If you still want to close your credit card accounts, even knowing it may reduce your credit score in the future, you can then consider a credit counseling program that can give you a single monthly payment and they will take care of dealing with your creditors.

And finally, as long as you are making at least the minimum payments as agreed or working through a credit counseling company then you should not expect any collection activity.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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