Anyone who faces unmanageable credit card debt knows the feelings of fear and stomach-knotting unease that come with it. Often, the problem is not knowing what to do about it.
Financial advisors say that while there are ways to repair your financial situation — not to mention your credit score — you need to be committed and have patience.
"It will take time," said certified financial planner Cary Carbonaro, managing director at United Capital. But if you do nothing, "you'll either carry a balance the rest of your life and just hope for some windfall, or it will get so overwhelming that you'll have to declare bankruptcy," she said.
According to the Federal Reserve, U.S. revolving debt — the bulk of which comes from credit cards — stood at $953.3 billion at the end of May. And the majority of cardholders — 65 percent — fail to pay off their balances monthly.
Among the estimated 38.1 percent of U.S. households that carry credit card debt, the average balance is $15,310, according to a recent NerdWallet study. Also, balance-carrying consumers shell out more than $2,600 in interest each year (assuming an annual percentage rate of 18 percent), the study found.
The only way to avoid such a situation is to never carry a balance — that is, pay the balance on time and in full every month — or not own a credit card.
In fact, the only reason to even have a credit card, say many advisors, would be to establish and maintain a good credit history so other banks are willing to take a risk on you for big-ticket items, like a house or car.
But people who find themselves in credit card trouble often are living beyond their means or dealing with catastrophic troubles, such as costly treatment for a medical condition or prolonged unemployment.
Regardless of the reasons, "credit cards are not free money," Carbonaro said. "There's a price to be paid, and it's a steep price."
She said that maxing out your cards or opening new accounts not only puts a bigger financial burden on you, it also can lower your credit score. In essence, those moves signal to the credit bureaus that you are becoming a bigger credit risk.
"People don't apply for credit when they don't need it," Carbonaro said. "They wait until they need it … and it becomes a recipe for disaster."
The first step in easing your debt burden is to make sure that if you share your credit card account with, say, a spouse, you both are on board.
"There's nothing worse than one person trying to reduce debt and the other one still racking up debt," said CFP JoAnn May, co-founder and principal of Forest Asset Management. "It's not always easy, but it has to be a joint [commitment]."
Assuming bankruptcy is off the table, your next step is to contact your creditors individually and try to negotiate either a lower interest rate or a full or partial forgiveness of the loan. While these moves will ding your credit report, they could lower the amount you're paying to the bank or reduce your monthly obligation.
You can do all this on your own or seek out a credit-counseling professional. Specialized nonprofit groups help with the details of getting out of debt, along with helping create a budget for you. If appropriate, they will create a debt-management plan. This involves the agency doing the creditor negotiations for you and then consolidating your debt into one payment that the agency distributes to the banks.
The other thing they often do is explore whether bankruptcy is your best option. Industry estimates show that 10 percent of all credit-counseling clients should consider bankruptcy.
Be aware that if you do decide to go the bankruptcy route, you are legally required to first work with an approved credit-counseling agency.
Also, not all credit card debt is automatically discharged during bankruptcy. For instance, if you run up your balance within a couple months of filing, it typically is viewed as fraud. If you can't prove otherwise, you'll be on the hook for the debt.
There also can be tax implications. In general, forgiven debt is considered by Uncle Sam to be income.
The downside, of course, to freeing yourself of debt — whether immediately through bankruptcy or over a few years via a repayment plan — is the havoc wreaked on your credit report.
Repairing your credit score takes time. After bankruptcy, seven years to a decade could pass before any bank will take a risk on you. And often, the only type of credit available at first will be a credit card secured with a deposit. If you make on-time payments consistently, the card issuer might eventually convert the card into an unsecured card.
The important thing, advisors say, is to avoid being in that situation ever again. And that means living within your means and setting aside an emergency fund equal to at least three months' worth of your salary so you can handle unexpected life events without going into debt.
"Pay off your balance in full every single month," said Carbonaro at United Capital. "If you won't be able to pay it off in full, do not use it.
"There should be no reason to carry a balance, ever."
She added that despite what some people think, carrying a balance does not help your credit score. "It only decreases what's in your pocketbook, because you're just paying more in interest," she said.
Some of the misconceptions about credit cards, say advisors, arise due to a lack of financial education. Also, it's the kind of debt that many people hide from friends and family.
The NerdWallet survey showed that 70 percent of people think a bigger stigma surrounds credit card debt than other kinds of debt. And about 35 percent say they would be more embarrassed to discuss it.
But with millions of people seeking out credit counseling services yearly, you're not alone. And while repairing your financial situation can take an emotional toll, it might leave enough of a scar to prevent it from recurring.
"Remember how you felt when you had that debt," said May of Forest Asset Management. "Try not to ever go there again."
— By Sarah O'Brien, special to CNBC.com