When you’re buried in debt, everything feels harder. You lose sleep. You avoid the mailbox. You start counting pennies at the grocery store. Whether it’s credit cards, medical bills, personal loans, or a mortgage that’s too much to handle, the weight of debt can be crushing.
Thankfully, you’re never out of options. You just need to implement some actionable steps in the right direction. Here are a few!
1. Get Honest About the Numbers
The first step in any debt relief journey is clarity. If you’re overwhelmed, you might be avoiding your bank statements or ignoring credit card balances altogether. That’s understandable, but the only way to take control is to face the numbers.
Create a list of every debt you owe, including credit cards, medical bills, car loans, personal loans, mortgage payments, back taxes, etc. Include the minimum payment, interest rate, and current balance for each.
Once you see the full picture, you can start building a plan. You may find that some debts are more manageable than you thought. You may also spot the ones that are bleeding you dry with high interest or penalties.
2. Implement a Debt Repayment Strategy
Once you know what you’re dealing with, it’s time to prioritize. Two of the most popular debt repayment strategies are the snowball method and the avalanche method – and either one can work, depending on your personality and preferences.
- The snowball method has you pay off your smallest debt first. Once that’s gone, you move on to the next one, then the next. The momentum you build from early wins helps you stay motivated.
- The avalanche method focuses on paying off the debt with the highest interest rate first. This saves you the most money in the long run, even if it takes a little longer to feel the progress.
Whichever approach you choose, consistency is key. Make your minimum payments on all accounts, and throw every extra dollar at your target debt. You’ll start to see traction – and that alone can lift a huge mental weight.
3. Look Into Mortgage Modification
If your biggest financial stress is your mortgage, you’re in good company. Falling behind on payments can put everything your family has worked so hard for over the years at risk. But before you panic, understand that you may have options to make your mortgage more affordable.
Mortgage modification allows you to work with your lender to change the terms of your loan. That could mean lowering your interest rate, extending the repayment term, or rolling missed payments into the new balance. The goal is to reduce your monthly payment to something you can afford – without losing your home in the process.
It can be complicated, and lenders aren’t always eager to offer these changes. That’s where legal support can help. A bankruptcy attorney can help you explore mortgage modification and advocate for terms that make sense (even if you aren’t filing for bankruptcy). They’ll also help you navigate the paperwork and protect your rights throughout the process.
4. Work With a Credit Counselor
When you’re juggling multiple debts and unsure which way to turn, a credit counseling agency can help you simplify. These nonprofit organizations offer free or low-cost guidance on budgeting, debt management, and long-term financial planning.
They may also offer a Debt Management Plan (DMP) – a structured repayment plan where you make a single monthly payment to the agency, and they handle disbursements to your creditors. In many cases, they can negotiate lower interest rates or waive fees, making it easier for you to catch up.
This isn’t the same as debt settlement, where you pay less than you owe. A DMP is about paying back what you borrowed, just with more favorable terms. If you’re feeling overwhelmed, a certified credit counselor can help you sort through the chaos and recommend a strategy that fits your situation.
5. Know When to Consider Bankruptcy
No one wants to think about bankruptcy. But if your debt has become completely unmanageable – if you’re skipping essentials, drowning in interest, or facing lawsuits – it might be time to consider it as a reset.
Bankruptcy isn’t a magic fix, but it can legally eliminate certain types of debt, stop collections, and protect your property.
- Chapter 7 can discharge unsecured debts like credit cards and medical bills in a matter of months.
- Chapter 13 can create a repayment plan that helps you catch up on secured debts like a mortgage or car loan while keeping those assets.
And believe it or not, bankruptcy can actually help your credit in the long run. In most situations, it’ll actually allow your score to rebound faster and put you in a position to begin getting credit opportunities within a few years.
Putting it All Together
Debt can feel all-encompassing. And while it’s definitely not a situation you want to find yourself in, it’s nice to know that you have options for getting relief. It all comes down to how willing you are to be proactive about the situation.
These tips will allow you to get started moving in the right direction.