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If you manage to work out a debt settlement agreement, the creditor is all but guaranteed to report your forgiven debt to the IRS. The amount of tax you owe on the forgiven debt depends on your adjusted gross income and your tax rate.
Even if you fall in a low tax bracket, you could face a huge bill to the IRS.
The third option is to apply for a home equity loan, which is a secured loan that uses your home as collateral.
If the minimum monthly repayment amount is as low as 2% of the card balance, the interest can often exceed the amount owed.
This means that simply making the minimum repayments will never be enough to pay off the credit card debt in full.
Paying back the minimum amount each month can be an expensive business, with the bulk of the debt coming in interest.
Even with a 0% rate, paying the minimum is unlikely to make much of a dent in your credit debt.