How to Dissolve Credit

Dissolving or eliminating credit is easy. However, a person should not confuse credit with debt. Digital Federal Credit Union defines credit as "confidence in a borrower's ability and intention to repay." Credit is available in a variety of forms, including credit cards that allow a person to make charges and pay the balance in a lump sum or through monthly payments. Debt occurs after a person uses credit to buy a car, pay for a vacation or for some other purpose.

Instructions

1

Dissolve credit by reducing or closing credit lines, such as on credit cards. For example, a person with a $5,000 limit on a credit card and no balance on the card can dissolve the credit line by contacting the bank. Call your bank by dialing the number on the back of the credit card. Tell the representative that you are dissolving or reducing your credit lines and would like the bank to reduce your credit line to a specific level. Tell the representative your desired new credit line, or close the account completely. Follow up in writing with a letter.

2

Call other creditors and make the same request. Use this tactic to close credit lines entirely or reduce them to a level that is still above current balances. It's up to you to decide how much credit to dissolve.

3

Dissolve debt in other ways. Dissolve delinquent credit card debt through debt settlement. Call credit card companies or debt collectors and offer to settle delinquent accounts for less than the full balance. Settlements can be reached for 20 to 70 percent of the balance, according to "The New York Times." Accounts past due by 90 days or more are often eligible for debt settlement. Get terms of debt settlement agreements in writing before making payment by cashier's check.

4

File for bankruptcy to dissolve debt if your debt is excessive and you cannot afford daily living expenses as a result. Chapter 7 bankruptcy dissolves unsecured debt such as credit cards in just three or four months. Chapter 13 focuses on reorganizing debt but also helps eliminate debt through a payment plan lasting three to five years. Bankruptcy is an extreme form of debt management and is very harmful to your credit rating. Use it as a last resort for dissolving debt.