Debt Assistance

If you are having trouble paying down your debts, there are programs available to help you become debt-free.

Some are more involved than others, and some methods have lasting consequences. Which form of debt assistance is right for you depends in large part on your circumstances and, most significantly, what sort of new arrangement you could realistically commit to successfully.

Calculating Your Debt

Take a close look at your finances, including your income, expenses and debts. Determine how long it would take you to pay off your debts under your current arrangements. Figuring this out in advance will help you to better evaluate debt assistance offers by giving you a point of comparison.

Examine how long it would take you to pay off your debt using different forms of debt assistance and compare that to your current timeframe. Compare as well how much that debt will cost you overall in the long run using a debt assistance program as opposed to your current repayment arrangements.

The bottom line should be reassuring, however. If you are in debt and want to find a way out, there is a way to do it.

Credit Counseling

One of the easiest first steps you can take toward paying down your debt is seeking the guidance and support of a credit counselor. Distinct from credit repair agencies, which charge you money to perform actions you can just as easily perform for free for yourself, a credit counseling agency is not for profit and will charge you nothing.

The exception to this is if you have a credit counseling agency help you set up a debt management plan (see below). A credit counselor can help you analyze your finances, including your debts, income and spending, and come up with a strategy to pay off your debt within three to five years, if at all possible.

Debt Consolidation

Debt consolidation is a useful strategy if you have many sources of debt to many different creditors. Presumably, each of your debts has a different interest rate, and some of them are naturally higher than others. Debt consolidation is a process whereby you combine all your separate sources of debt into one new form of debt at a lower interest rate.

The lower interest rate allows you to save money over the life of the loan. The single debt account rather than multiple accounts simplifies repayment and gives you one reasonable payment to make each month instead of the sum of multiple payments to multiple creditors.

The single account also allows you to apply more of your payments to principal rather than continue to chase rising interest charges. This combination of benefits can result in you paying off your debt quicker and easier.

Debt Management

A debt management plan is not right for everyone, but if it is right for you, it could help you pay off your debts faster and at a lower interest rate. A debt management plan is a repayment plan negotiated with your creditors to guarantee repayment in exchange for a reduced interest rate.

Repayment is guaranteed by way of an escrow account you set up and pay into regularly instead of making payments directly to your creditors. The escrow account then pays your monthly bills to your creditors automatically.

There will be a flat fee to set up such an account and a monthly fee to maintain it. A nonprofit credit counselor can help you get everything in order.

Debt Settlement

In debt settlement, you negotiate a lower balance on your debts with your creditors. Of course, if your creditors believe it is possible to collect the full balance due, they will not agree to debt settlement. Therefore, you must first convince them that you may never be able to pay them back.

This is a risky proposition. What you do is stop making all payments on those debts. Instead, open a bank account and deposit your payments in there instead. That way, when you offer to start making payments again if only your creditors would reduce the amount you owe, you already have the funds to resume making those payments and do not need to subtract it from your living expenses.

Many companies offer to help you settle your debts for a fee, but you can conduct the same negotiations, yourself, for free. Just keep in mind that it may not be a simple process and will require persistence on your part.



Bankruptcy is a partial or total discharge of your debts and is often a last resort option. It comes with severe consequences, however, staining your credit for a decade to come. If you do decide bankruptcy is your only option for getting out of debt, there are a couple of types for which you can file.

If you earn an income and believe you could conceivably pay off your debt in three to five years if your creditors were willing to restructure your repayment program, you would file for Chapter 13 bankruptcy. If you do not believe there is any way you will ever be able to pay off your debts, you would file for Chapter 7 bankruptcy.

Be aware that most or all of your assets will be liquidated in the process.

Filing for bankruptcy will also negatively affect your credit, and it may be difficult to secure loans or lines of credit after you fil

Tips for Paying Off Your Debt

In addition to all of these debt assistance methods, there are many tips for paying off your debts that you can implement on your own. They include the following:

  • Address the main causes of your debt.
  • Stop using any credit cards you are in the process of paying off, because it only keeps you chipping away at a growing balance.
  • Stop looking up your credit score, as it tells you more about the past than the present or future.
  • Look up the remaining balances due and minimum monthly payments on your debt instead.
  • Budget for your monthly payments and make a routine out of paying those bills.
  • Go easy on yourself as you proceed with whatever approaches you take to resolving your debt, be it alone or with assistance.

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