Which Credit Card Debt Forgiveness Solution is Right for Me?


Dear Steve,

We have $21,000 in credit card debt and a child starting college in the fall 2018. The credit cards are in my name only, not my husband’s. I have talked to credit counselors and agreed on a payment plan for 2 of the 3 credit cards. This will save me thousands of dollars in interest and lower the pay off time to 4 years vs. 27 years. That is all great, but the payment is high for us – $548/month. We do not have a mortgage – renting the home from my husband’s sister. I am still considering filing Chapter 7 bankruptcy. I’m reading a lot of articles from your site. I need this one important question answered before moving forward.

If I file Chapter 7 bankruptcy, is my retirement (approx. $75,000) invested in a 401(k) or invested in any other way SAFE? I have to know if filing bankruptcy, this retirement money will not be looked upon as ability to pay off debt.



Dear Valerie,

Your retirement savings in a qualified investment plan is generally protected but the smart thing to do would be to talk to a bankruptcy attorney who is licensed in your state and ask them specifically about your specific investment vehicle.

You’ve really got to ask yourself if a payment plan, even if it is reduced, is an effective strategy to meet your current and upcoming financial needs.

There is no dispute that bankruptcy is the least expensive solution to get out of debt in the shortest amount of time and allow you to do better moving forward. Just read this and this.

Credit Card Debt Forgiveness comes in many forms.

You can also compare all of your general debt relief options by using my online Get Out of Debt Calculator.

It might turn out that the credit counseling approach is best for you but how are you going to really be able to evaluate it if you don’t talk to a bankruptcy attorney in an effort to learn what bankruptcy would really mean for you?

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Let’s look at what a repayment plan will cost you in lost retirement if you do decide to take 4 years to repay the debt.

Assuming you are 46-years old and made four years of payments at around $548 a month instead of saving that money for retirement at age 70, you are tossing away $235,816 in lost future retirement value. You can use my online calculator yourself.

Credit card forgiveness lost retirement calculator.

At this point my biggest concern is that you make an informed decision and not an emotional one based on assumptions. Do some more research, get the facts, and then decide which solution is right for you. Please.


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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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