I Can't Pay Off All of My Debt

Consumers can run into difficulty paying their debts for any number of reasons. If you cannot repay your debts or make the minimum payments every month, you have several options available to you. Understanding what option is best for you requires a careful evaluation of your current and future finances.

Debt Plans

The first step in addressing a financial problem is knowing exactly what the problem is. Not only do you need to know how much debt you have and how much you have to pay every month, but you also have to know how much money you have coming in and how much you're spending on other bills and expenses. Sometimes, decreasing other expenses allows you to pay your debt back without resorting to more severe measures.

Negotiating New Terms

Once you understand your financial situation, you can then use that information as part of a debt negotiation. Your creditors may be willing to work with you to arrange new debt terms that allow you to more easily handle your debt payments. They are under no obligation to do so, but by presenting your financial situations and proposing a reasonable term adjustment, you can sometimes renegotiate new terms to make payments easier.

Negotiating Settlements

Getting a lower interest rate or lowering your monthly payments is sometimes not enough. In some situations, you can settle your debt by paying off a lump-sum amount that is lower than the total you owe. You should always be careful with debt settlements, as your creditor will indicate that you settled the account on your credit report, which can hurt you other loan terms, and settled loans may count as taxable income.

Bankruptcy

The last resort for any debtor is bankruptcy. When you declare bankruptcy, you are protected from your creditors until the bankruptcy court hears your case and issues a discharge. Depending on the kind of bankruptcy you go through, you can enter into a repayment plan that allows you to keep some of your assets and make debt payments over time, or you can liquidate your assets and get rid of all debts.