The Bankruptcy Option
Bankruptcy is an option that can legitimately eliminate all your credit card debt. A chapter 7 bankruptcy can wipe out all of the typical credit card debt (unless you go on a shopping spree just before filing bankruptcy). A chapter 13 bankruptcy can reduce how much you pay and spread payments over three years or more—it is more typically used if you want to protect against the loss of your home or car.
While many people file for chapter 7 bankruptcy to get rid of crushing credit card debt, do not rush into bankruptcy with just a minor credit card obligation. There are limits to how often you can file bankruptcy and this option is best saved for when you are having trouble paying many of your debts and not just a relatively small credit card debt, and when the total amount of your debt is substantial.
Bankruptcy is also not free. If you are very low income and file under chapter 7, you may be able to waive the bankruptcy filing fee. Otherwise, as of 2021, you will pay $338 to file a chapter 7 bankruptcy or $313 to file a chapter 13 bankruptcy. You can pay these fees in installments. It is also highly recommended that you file with the help of an attorney, who may also charge a fee.
Bankruptcy will, however, give you a fresh start without the credit card debts hanging over you. Your credit report will show that your credit cards are not delinquent, because the bankruptcy has cancelled them out and many creditors may find you more creditworthy for having passed through bankruptcy rather than being buried under debt. On the other hand, the fact that you filed bankruptcy will be on your credit report for ten years, while the credit card delinquency stays on your credit report only for seven years.
A good rule of thumb might be that it is too soon to file for bankruptcy when you just have a relatively small amount of delinquent credit card debt, but that it may make sense to file once the creditor has won a lawsuit against you and you have wages or bank accounts you want to protect from seizure.