How to Deal with Too Much Debt

If you feel like you’re in over your head with personal debt, you’re not alone. The ‘How to Deal with Too Much Debt’ guide addresses the widespread issue faced by many Americans. From credit cards to medical bills and personal loans, coupled with the economic downturn and job losses from the pandemic, managing debt can be daunting. Let’s explore effective ways to navigate this challenge and regain financial stability.

Five Strategies You May Want to Avoid

The first advice of experts in the field is to be sure you don’t make your situation worse by making common mistakes.  In particular:

the concept of managing excessive personal debt 2
  • Beware of just paying the minimum payments on your debts. This will result in your overall debt actually growing and your problems will only become worse.
  • Beware of relying on friends and family, as it could damage relationships with the most important people in your life.
  • Beware of unscrupulous credit counselors that demand cash up front, or high fees for help they promise, but don’t deliver.
  • Avoid taking out a new high-interest loan to pay off lower interest rate loans.  It may be easier to just have one payment, but it will actually increase the amount you have to pay back.
  • Declaring bankruptcy when debt settlement may work for you.

10 Easy Steps to Tackle Your Debt and Achieve Financial Freedom

Slash Your Debt with Ease! Our simple, step-by-step guide offers practical tips to conquer debt. From savvy budgeting to smart repayment strategies, unlock your path to financial freedom today!

  1. Pay More Than Just the Minimum: It’s tempting to pay only the minimum on your bills, but this will keep you in debt longer. Try paying a bit more each month.
  2. List All Your Debts: Know what you owe. Write down every debt, its interest rate, and minimum payment. This gives you a clear picture of where you stand.
  3. Tackle High-Interest Debts First: Focus on debts with the highest interest. Paying these off first saves you money in the long run.
  4. Make a Budget: Look closely at your spending. Cut back on things you don’t need. Use the money you save to pay down debt.
  5. Consider Consolidating Your Debt: Sometimes, it’s easier to handle one payment instead of many. A consolidation loan might lower your interest rates and make payments more manageable.
  6. Ask for Lower Interest Rates: If you’ve been a good customer, your lender might reduce your interest rate. This means more of your payment goes towards paying off the debt.
  7. Extra Income Can Help: Think about a side job or sell things you don’t need. Use this extra cash to pay off debt faster.
  8. Use Unexpected Money Wisely: Got a tax refund or a bonus? Put it towards your debt. It’s a quick way to reduce what you owe.
  9. Keep Track of Your Progress: Seeing your debt decrease is motivating. Celebrate your milestones to keep yourself on track.
  10. Get Advice: Talk to a credit counselor. They can offer helpful advice and guide you towards the best debt repayment plan for your situation.
  11. Live Within Your Means: Try to avoid taking on new debt while you’re paying off what you already owe.

Debt Settlement or Bankruptcy?

Two common solutions people turn to are debt settlement and bankruptcy. Generally, if you are struggling with a financial hardship and are behind or falling behind on your minimum payments, then debt settlement may be right for you. If your situation is more dire, then you may consider bankruptcy.

However, bankruptcy is a serious step with long term implications for you and your financial future. Most experts would suggest it only as a last resort. The better course is to attempt to work through your debt issue with your creditors, and this is where debt settlement companies can help.

How to Deal with Too Much Debt
How to Deal with Too Much Debt

What Is Debt Settlement?

You may have heard companies advertising that they can settle your debt for less than you owe.  Is this process legitimate?

Working with a debt settlement company can actually be a great solution for many people struggling with a financial hardship. Debt settlement is the process of negotiating with your creditors to get them to forgive a portion of your debt. 

One such company getting a lot of attention right now is CuraDebt. That’s because the company features a free debt-relief consolidation tool. Within one minute — and no obligation — you can see if you qualify for a free consultation. What’s more, after you talk to them on the phone, you’re under no obligation to go with the company. They just offer you the kind of useful information that will help you make the next move.

How It Works

Specialty settlement companies determine a reasonable monthly amount that you can afford to pay, which is based on the total amount owed. You make your affordable payment every month into a special purpose account, and as these funds accumulate, the settlement company reaches out to creditors to negotiate a final actual settlement amount. Typically these companies have excellent relationships with creditors and are negotiating on behalf of thousands of people every day.

So, how do you find a legitimate and trustworthy debt settlement company to work with? Look for a company that offers a free, no-obligation consultation to evaluate your options. You should also read the reviews to see what people are saying. 

Above all, read the fine print. Don’t just sign with a company because they look like salvation. You want to make sure you know what you’re getting into first.


What is Debt Settlement?

Debt settlement is a strategy to reduce the amount of debt you owe. It involves negotiating with creditors to agree on a lower amount than what you currently owe. Once this new amount is agreed upon, it becomes your new debt, which is usually less than your original debt.

How Does Debt Settlement Work?

Negotiation Process: You or a debt settlement company you hire talks to your creditors. The aim is to convince them to accept a lower payment as a full settlement of your debt.
Payment Accumulation: In many cases, you’ll start putting money into a special account. You save up until you have enough to pay the agreed new lower debt amount.
Settling the Debt: When enough money is saved, you or the settlement company pays the creditors. This payment is in place of the full debt you owed.

Why Consider Debt Settlement?

Reduced Debt Load: The main advantage is paying off your debt for less than you owe.
Avoid Bankruptcy: It can be an alternative to bankruptcy, which has more severe credit score impacts.

Is It Right for You?

Debt settlement can be a good option if:
You have a significant amount of unsecured debt, like credit card debt.
You’re facing financial hardship that makes it impossible to pay the full debt.
You want to avoid the more drastic step of bankruptcy.
However, it’s not a one-size-fits-all solution. It’s important to:
Understand the risks and impacts.
Consider other debt relief options.
Maybe talk to a financial advisor or credit counselor for personalized advice.

Is paying just the minimum on debts a good strategy?

No, it extends the repayment period and increases interest costs.

Should I use a debt settlement company?

It can be helpful, but choose a reputable company and understand their terms.

What’s the risk of high-interest loans to pay off debt?

They can increase your total repayment amount.

What’s the first step in starting debt repayment?

List all your debts, noting interest rates and minimum payments.

How do I track my debt repayment progress?

Regularly check your balances and celebrate milestones to stay motivated.

What is a 0% APR balance transfer?

It’s transferring high-interest debt to a card with no interest for a set period.

How to Deal with Too Much Debt?

Dealing with excessive debt requires a strategic approach. To start, make sure you pay more than the minimum amount each month. It’s essential to create a comprehensive list of all your debts to understand your financial situation better. Prioritize paying off debts with high interest rates first; this will help you save money in the long run.
Crafting a budget is another critical step; it will help you find areas where you can cut expenses and allocate those savings towards paying off your debts. Additionally, consider consolidating your debts to simplify your payments. Don’t forget to negotiate with your creditors for lower interest rates if possible. Finding ways to increase your income can also be beneficial.
Use any unexpected windfalls, such as tax refunds, to make extra payments on your debts. Tracking your progress and celebrating milestones can help keep you motivated. Finally, avoid accumulating new debt while working on reducing your existing obligations. By following these steps, you can gradually regain financial stability and achieve debt relief.

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As a nationally-recognized personal finance writer for the past 8 years, The Spruce, LendingTree, Hedge With Crypto, Investopedia, Money Under 30, and other widely-followed sites.  An expert in teaching others how to budget, save money, pay off debt, invest and take advantage of credit card rewards, I love to help others find the best ways to manage their money. Follow me on X and  Linkedin.

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