How Can I Solve This?

Debt Settlement

If you absolutely cannot afford to get yourself out of debt, there are more drastic measures you can take, but they will be reported on your credit report and affect your credit score.

Some creditors allow customers to directly negotiate a debt settlement, meaning they agree to accept less than the full balance you owe as payment for the loan. A debt settlement may allow you to repay only 20% to 75% of the balance owed.

Once the debt settlement has been repaid, it shows on your credit report as a $0 balance. However, some creditors only settle with borrowers who are late on payments, meaning the late payment information will remain on your credit report for up to seven years.

Also keep in mind that forgiven debt, such as the amount you don’t have to repay in a debt settlement, generally counts as taxable income and may have tax filing considerations. If you go this route, get a letter to clearly document the settlement and show proof of payment in full.