How to Get Debt Relief

If it feels like debt is controlling every decision you make, you have more options than you might realize. Small budget changes, professional negotiation, and even legal protection through bankruptcy are all realistic paths toward a lighter financial load. This guide walks through the best ways to get debt relief, so you can identify the strategy that fits your situation.

1. Start With the Big Picture

Before you do anything else, you need to know exactly where you stand. You need a list of your income, assets, debts, and expenses. Include minimum monthly payments and interest rates for each debt.

This process may be as simple or as involved as you want, from a few lists on a piece of paper to a full spreadsheet. A good budgeting app automatically pulls your accounts and transactions to help you automate the process.

The goal is to know exactly how much you owe, what it's costing you, and how much you're able to repay each month. This first step matters no matter which debt relief path you choose.

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2. Decrease Your Expenses

Once you have everything in front of you, it's easier to find areas where you can cut back your expenses. Perhaps you'll find a streaming service you no longer need, or maybe you'll notice you've been eating out more than you realized.

If nothing obvious jumps out, get proactive:

• Shop for cheaper phone, internet, and insurance plans.

• Find ways to lower your energy bills at home. Adjust the thermostat or add window seals to make a noticeable difference.

• Set up an office carpool or ask about remote work to reduce commuting costs.

• Use store and savings apps to find digital coupons and rebates on groceries and household goods.

Even small cuts add up and make it easier to manage your debt payments.

3. Increase Your Income

An income boost may have a big positive impact on your financial health, including your ability to manage your debts. This could be a short-term boost, such as a seasonal job, or a long-term increase from a pay raise or new job.

You don't need to double your income overnight. Any extra income that goes toward your debts helps you stabilize your finances and find relief.

4. Refinance and Consolidate Your Debt

A refinance is when you use a new loan to pay off existing debt. If you use the new debt to pay multiple existing debts, you're also consolidating your debt.

A debt refinance may be a powerful tool for debt relief if you qualify for a loan or credit card with a much lower interest rate than you're currently paying. For example, if you refinance credit card debt with an average 25% APR using a loan that charges only 10% APR, you could make headway against the debt a lot faster. That's because at a lower interest rate, more of your payment goes toward lowering your debt instead of covering interest charges.

Your ability to find a lower APR largely depends on your credit standing. People with higher credit scores tend to receive lower interest rates.

5. Try the Snowball or Avalanche Method

Two popular strategies help many people work through multiple debts in an order that keeps them motivated or saves them money.

With the snowball method, you list your debts from smallest balance to largest. You pay the minimum on every debt except the smallest, and you put any extra money toward that one first. Once it's paid off, you roll that payment into the next-smallest debt, and so on.

With the avalanche method, you list your debts by interest rate instead, from highest to lowest. You pay the minimum on every debt except the one with the highest rate, and you put extra money there first. This approach typically saves more in interest over time.

Either method works. Pick the one that keeps you motivated, since sticking with the plan matters more than which order you use. Our guide on how to pay off credit card debt breaks down the math side by side.

6. Contact Your Creditors

Contact your creditors directly for debt relief as soon as you realize you're going to fall behind. Your potential debt relief options depend on your personal situation and your relationship with your creditor. They could include:

• A temporary pause in payments

• A lower interest rate

• Lower minimum payments

• Fee waivers

Creditors are more likely to offer these options to people in financial hardship, such as folks who have lost a job or gone through a recent divorce.

7. Understand the Statute of Limitations on Your Debt

Every state sets a time limit for how long a creditor or debt collector has to sue over unpaid debt. This is called the statute of limitations.

Once the statute of limitations passes, the debt becomes time-barred. Under federal rules, debt collectors aren’t allowed to sue or threaten to sue over a time-barred debt. The debt still exists, and a collector may still ask you to pay it. If anyone sues you over an old debt, respond to the lawsuit. In most cases, you’re the one who has to tell the court the statute of limitations has expired, and your creditor might win if you don’t. 

8. Consider Debt Settlement

Debt settlement is a negotiation with your creditors to get rid of your debt for less than you owe. If you experience financial hardship, debt settlement might be an option for unsecured debts like credit card balances, personal loans, and medical debt. Debt settlement is for someone who truly isn't able to fully repay their debts.

You can attempt debt settlement by negotiating with your creditors on your own. Alternatively, a professional debt settlement company can negotiate on your behalf. 

Debt settlement process

A debt settlement program typically follows a set process. You set aside money each month toward settlement offers. The company sets up a dedicated account for this purpose. You always own and control the account. 

Most people have a hard time saving money while also keeping up with debt payments, so while they’re setting aside debt settlement funds, they stop paying their creditors. It’s a way to build funds faster, and you’ll send a strong signal to your creditors that you’re in financial distress. Creditors don’t typically negotiate with people who are keeping up with payments.

If you don’t make your debt payments, expect credit damage and collection efforts. 

Once you've built up enough money for a settlement offer, the debt settlement company negotiates with your creditor. At Freedom Debt Relief, you get the opportunity to review and approve any agreement that’s reached. Once you approve, payment is made from your dedicated account.  The debt settlement company’s fee is paid from the same account.

Debt settlement companies aren’t allowed to charge upfront debt settlement fees.  They can only collect payment after they reach an agreement with your creditor, you approve it, and at least one payment has been made toward satisfying the approved agreement. 

Debt settlement carries real trade-offs. It’s not an ideal strategy for someone whose main concern is preserving a good credit score. Most people who pursue debt settlement have already fallen behind on payments. Settling all of your unsecured debts could take at least two to four years. There is no guarantee your creditors will settle, and the process has no fixed end date . Some creditors continue collection efforts, and even a lawsuit, while you build up your settlement fund.

Debt settlement may negatively impact your credit.

9. Watch for Debt Settlement Scams

Not every company offering debt help operates honestly. A few warning signs could help you spot a debt settlement scam before you hand over any money:

• A company that asks for fees before it settles any of your debts

• A guarantee that all of your debts will be settled or forgiven

• Pressure to stop communicating with your creditors, without an explanation of the consequences

• A promise tied to a government debt relief program that will pay off your debt

Do some research before you commit to any company. Search the company's name along with the word review, and check with your state's attorney general or local consumer protection agency.

10. Get Help From a Credit Counselor

Credit counselors help set up debt management plans. That’s a repayment plan credit card issuers typically agree to. Your credit counselor may be able to negotiate lower interest rates, and might be able to get late fees waived, to make it easier to repay your debts. 

Your enrolled accounts will likely be closed, and you might be asked to avoid using credit entirely while you’re in the program. If you miss a payment, your creditors could back out of the plan and put your interest rates back where they were.

In addition to full repayment of your debt, you might need to pay a modest fee to be in the program, typically $25 to $40 per month.

11. Explore Bankruptcy

If you're dealing with a lot of unsecured debt, such as credit card debt, then bankruptcy may be an option. Bankruptcy gives you legal protection from your creditors. 

If you’re eligible, Chapter 7 bankruptcy lets you walk away from most or all of your unsecured debt within a few months. You might have to give up some of the things you own.Before you can file, you have to pass a means test.   The court wants to know if you have the means to repay your debts. If you do, you can’t file Chapter 7. 

Chapter 13 bankruptcy is a repayment plan. You don’t have to give up any of your assets.  The plan lasts for three or five years. Once you complete your plan, the court discharges (forgives) your remaining eligible debt.

Bankruptcy is complex. Talk to a bankruptcy attorney licensed to practice in your state. People who move forward with the help of an attorney are far more successful than people who go it alone. 

12. Change Your Money Habits

No matter which debt relief options you use, examine the reason you got into debt so it doesn't happen again. One of the best ways to master your finances is to improve your financial education. Take advantage of online tools and resources, or seek out a financial advisor for one-on-one help.