Recent findings from the Federal Reserve revealed that Americans are still buried in debt even after the recession and financial recovery. In fact, as a nation we now have $884.8 billion of credit card debt, not to mention our rising student loan and medical debt. And while our credit card debt totals are down approximately 5% since last year, analysts point out that’s because so many people have defaulted on large amounts of debt, not that we’re paying it off. But with the stock market booming, things looking rosy in the real estate sector, and optimistic employment numbers, people often look past the struggle of many families who are still juggling far too much debt.

So today we’re going to point out a few options for those who feel like they’re drowning in credit card debt. Please note that there are pros and cons to all of these options it’s important to do your research and consult an attorney and your tax professional.

Stacking, or making extra principal payments:
Instead of just making minimum payments on your credit cards, which can take a very long time and cost you exorbitant sums before you’re debt free, it’s recommended that you pay extra to pay your cards off earlier. Call your credit card company and ask them the best way to make an extra payment that you want applied toward principal, not interest. Even small extra sums will speed up your payoff and save you a lot of money.

Pay off your highest interest account first and then use the same amount you were paying them to pay off your next highest card faster, and on down the line.

You actually need extra money above and beyond the amount of your minimum payments to use the “stacking” method to pay off accounts.

Debt Consolidation:
Instead of making multiple monthly payments to different credit cards and accounts (and paying high interest on all of them,) it may be wise to take out one new loan that you use to pay off all of your creditors. If your bank approves you, you’ll be able to pay all of your cards down to zero balances and have only one new, lower-interest payment to worry about. That usually saves you a lot in time and interest.

If you’re already overwhelmed with credit card debt or don’t have strong collateral – like a home with equity – then the bank may not approve you for a loan. Consumers will also have to resist the temptation to start spending on their credit cards again once they’re paid off!

Credit Counseling/Debt Management Plan:
A debt management plan is a strategy where your creditors may lower interest rates and set you up on a repayment plan, suspending your further use of your credit cards but not slipping into default. These are often negotiated by non profit credit counseling companies, which take a fee for their services and also may provide some education around debt and finances, and ideally, will save you money on interest charges and possibly lower your monthly payments to something more manageable. Of course you can call up your creditors and attempt to set up this arrangement yourself, but most people prefer to go through a non-profit credit counseling firm.

Your credit cards will be cancelled when you enter the plan so you won’t be able to use them anymore. You’ll be making on payment to the credit counseling firm, who will disburse that money to your creditors, so it’s important to pay on time, make sure your accounts are being paid as agreed, and track the progress diligently, as it usually takes 3-6 years to become fully debt free and many don’t stay the course.

Debt Settlement:
Debt settlement is a process where your creditors will take less than what’s owed as part of a negotiation. They’ll do this only when they think a consumer is in risk of defaulting on their debt and filing bankruptcy, which will leave them nothing. To settle debts successfully, your creditors will also want the entire settled amount or at least a big chunk of it all at once, at the time of the settlement. But for those who are successful, it’s not uncommon to obtain settlements of 40-60% of the total amount of the debt, eliminating all future interest payments and saving a bundle. So for those who are still employed and not financially destitute – but have no reasonable shot of every paying off the credit card balances – settlement may be a good option.

Unfortunately, there are many scams and bad debt settlement companies who take your money with big promises, but then do little or no work, leaving you in a worse position. The Federal Trade Commission has stepped in and carefully regulated who can take money for services and when, so never pay up front fees without results. You can try it yourself or hire an attorney to assist, but make sure they are in good standing with the FTC and BBB. Also, the banks may not negotiate until you’ve missed a few payments, so your credit rating will be negatively impacted, though it’s still better than a BK on your credit.

There are several kinds, of bankruptcy, but consumers usually file Chapter 7 when they are overrun with debt and financially destitute. It’s important to note that their creditors aren’t paid off during a Chapter 7 BK, but they are legally excused from paying those debts. But for folks who have no other option and lost their job, got divorced, have serious medical problems, business failings, etc., bankruptcy may be the best solutions, offering them a fresh start.

Bankruptcy causes serious damage to your credit score and it might take years before you can qualify for a mortgage or a loan again. People who have significant liquid assets might also not qualify for bankruptcy without possibly losing those assets, and there is a cost to pay a bankruptcy attorney.