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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

7 Debt Relief Options for Overcoming Insurmountable Debt

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Content was accurate at the time of publication.

It’s one thing to grapple with a mounting pile of debt — but it’s entirely different to feel hopeless when trying to meet monthly payment minimums. If you struggle to make your minimum payments each month and don’t see any way out, it might be time to explore your debt relief options. Here are some ideas that can help you get a better handle on your payments, your debt and your financial confidence.

1. Create and review your budget

Chances are, if you’re struggling with debt payments, you’ve already scoured your budget for ways to cut costs. If you don’t have a budget or haven’t kept yours up to date, this step could alert you to overspending or help you identify recurring costs that could be paused or cut.

For example, you may find that energy costs are high and ask your provider about discount programs. Or, you could research ways to reduce student loan payments, such as through income-driven repayment plans or by putting a temporary pause on payments through forbearance or deferment until you can better juggle your financial obligations.

This may be a good option for those who:

  • Don’t have a budget to help with debt management or haven’t reviewed theirs recently.
  • Aren’t sure where their money is going or are unsure of recurring costs.
  • Want to make sure they aren’t inadvertently adding to their debt.

How to get started

If you don’t yet have a budget, start small: Go into your bank account and make a list of your income, as well as recurring expenses from the past month, such as rent or mortgage payments, utility bills and debt payments. Add in grocery runs, as well. This will give you an idea of your bare minimum monthly costs. From there, add in less-essential costs, like entertainment and dining out.

You might also use a budgeting app to automate this process. Once you have spending information on hand, you can begin to review your finances. Ask yourself if anything looks amiss. For example, if you spent more money dining out than expected, you might try meal prepping in the next month to see how that affects spending. Or, you might notice you are still signed up for a subscription service you don’t use and can cancel. Even saving $10 can make a difference when you’re struggling with bills.

Over time, keep track of each month’s bills and expenses. Doing so will help you identify any big jumps in spending in case you can curb them. It can also reveal how much money you need to free up or earn to keep your finances on track. Having a concrete goal will be beneficial as you move into these other options.

2. Contact your creditors

Creditors may have proprietary debt relief options and payment modification programs that you can take part in, but you have to contact them to find out. When you do reach out to creditors and explain your situation and current hardship, you may be able to get due-date extensions, modified payment plans or permanent changes in monthly due dates.

For homeowners, a mortgage modification can help keep you in your home. This type of program would add your outstanding balance to your loan amount. Your mortgage lender would then adjust your repayment plan accordingly. For credit card debt relief, you might call your issuer and ask that late fees be waived or reduced to make repayment more affordable.

No matter your approach, don’t be afraid of asking for debt help. You won’t be punished by creditors for exploring your options.

This may be a good option for those who:

  • Have not yet spoken to creditors to explore debt relief options.
  • Are already behind on payments or who would benefit from a different payment due date.
  • Would benefit from rolling an outstanding debt into their loan balance.
  • Have debt that hasn’t yet gone to collections.
  • Can consistently make smaller payments over a longer period.

How to get started

Review your most recent bills and see if there are any instructions for reaching out to creditors. You can find contact information on your bill, online or — in the case of credit cards — on the back of your card.

When you call creditors, explain your situation — whether you’re dealing with job loss or unexpected expense — and ask what debt relief or discount programs they offer. If you have a track record for on-time payments, use that as leverage when requesting payment assistance.

Dealing with high medical bills? Call the billing department of your medical provider. Ask for an itemized list of costs and dispute anything that looks amiss. Be honest that you’re struggling repaying the amount as well, as your provider may have a payment assistance program or outright reduce what you owe.

3. Seek credit counseling

Credit counseling, also known as debt counseling, is offered by nonprofit organizations and aims to help consumers with money and debt management.

When you work with a credit counselor, they might help you work on your budget and review it, help you prioritize your bills and may even work with your creditors to stop collection actions and pause fees through a debt management program.

This may be a good option for those who:

  • Aren’t sure where to start when it comes to debt management.
  • Prefer to get budgeting and money advice from a trained and unbiased professional.
  • Need additional resources to help them get a handle on their finances.

How to get started

To find a credit counselor in your state, check with your state’s attorney general. You can also find credit counselors through the National Foundation for Credit Counseling (NFCC). Be prepared to meet with a counselor for at least 30 minutes by phone, online or in person. Have your relevant financial information ready, including your household income, monthly expenses and total debts.

4. Enroll in a debt management program

Credit counseling agencies often offer debt management programs that consolidate monthly debt payments into a single installment, paid to the counselor who then distributes it to your creditors. The counselor works with your creditors to potentially lower interest rates and waive or reduce fees so you can get a better handle on your debt.

Debt management programs typically last three to five years and aim to eliminate your debt. Note that these plans may have a startup and/or monthly fee, unless your household income falls below 150% of the poverty level.

This may be a good option for those who:

  • Feel overwhelmed by multiple debt payments each month.
  • Are ready to stick to a payment plan for three or more years.
  • Are comfortable closing some lines of credit to limit additional debt during the program.

How to get started

Debt management programs are offered by credit counseling agencies and organizations like the American Consumer Credit Counseling. Be prepared to attend a meeting or counseling session to learn about better debt and financial management processes. You should also expect to share information about your income, monthly bills and debts with a certified counselor.

Come to your meeting with questions, such as how the debt management program works, which credit accounts you may be expected to close and potential fees. If you worry about affording fees, mention this to your counselor.

5. Consolidate your debt

Debt consolidation allows consumers to independently restructure their debt by taking out a new loan or line of credit, and using it to pay off existing debts. The goal of this debt relief option is not only to consolidate debt to one payment, but to replace high-interest debts with a lower-interest loan or line of credit, ultimately reducing their overall costs and potentially speeding up repayment.

Another key benefit of debt consolidation is the ability to choose a new repayment term. With a loan, you can set a longer repayment term to reduce your monthly payments. This would keep you in debt for longer and increase your overall interest charges but make repayment more affordable. A shorter repayment term, on the other hand, would increase your monthly payments but reduce your overall cost of borrowing and get you out of debt sooner.

Debt consolidation is typically done using a debt consolidation loan (also known as a personal loan) or balance transfer credit card. However, you can consolidate using other products, such as a home equity loan.

This may be a good option for those who:

  • Can secure more affordable terms on a loan or line of credit than they are currently paying.
  • Would be able to avoid new debt after consolidating their old debt.
  • Can complete payments under the terms of the new credit account or loan.

How to get started

When exploring debt consolidation, first compare your borrowing options. You can prequalify with lenders to see whether you’d likely qualify for a loan or line of credit, and under which kinds of terms. The prequalification process doesn’t affect your credit and only requires basic information, such as your name, address, income and how much you’d like to borrow.

Prequalify with a few lenders and compare your options. Review fees and APRs, which are an accurate measure of your borrowing costs. Once you’ve selected a lender that works for you, you can submit a formal application, which will affect your credit in a small way. If approved, you can use your new loan or line of credit to pay off your existing debt. Some lenders will do this for you.

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What if I have bad credit? For bad credit borrowers, a secured loan may be a viable, more affordable option, as you’ll back the loan with collateral, such as your car or home. This reduces the lender’s risk as they can seize the collateral if you fail to repay the new debt. You can also explore getting a cosigner to increase your odds of approval on an unsecured loan.

6. Consider debt settlement

Debt settlement, when handled on your own, can be a viable way to reduce your debt. Consumers can negotiate their own debt settlement by reaching out to their creditors and proposing revised payment plans along with reductions in fees, interest and sometimes balances.

Although you may find third-party debt settlement programs, they should generally be avoided.  These programs ask you to stop making payments in an attempt to force creditors into offering a lower payoff amount. However, this strategy is not guaranteed to work and will certainly ruin your credit. Further, these programs charge high fees and are often rife with debt consolidation scams.

This may be a good option for those who:

  • Have time to devote to reaching out to creditors.
  • Are able to stay on top of outreach progress and agreements.
  • Are currently experiencing a financial hardship that they can document for creditors.

How to get started

The first two critical actions are to list out all of your debt and then to create a sustainable budget, so you know what kind of payments you can offer creditors. In some cases, if you’ve recently come into a lump sum of money, you may be able to negotiate for a lower payoff amount than what you owe.

When you know what you can offer, reach out to your creditors and start negotiations. Be prepared to play hardball in some cases to get debt relief.

7. Weigh bankruptcy options

If full repayment of your debt seems completely out of reach, then bankruptcy might be an option you should consider. However, this debt relief option will severely damage your credit.

The two most commonly filed consumer bankruptcies are Chapter 7 and Chapter 13:

  • Chapter 7: This is a liquidation bankruptcy through which assets are liquidated to pay off debts and remaining unsecured debts are discharged. To qualify, you must take a means test showing your income doesn’t exceed limits.
  • Chapter 13: This is a repayment plan bankruptcy. Through it, you create a three- to five-year repayment plan, and once it’s completed, the rest of your unsecured debts are discharged.

This may be a good option for those who:

  • Can pass the means test.
  • Don’t see any other way to get out of debt.
  • Are comfortable creating a three- to five-year repayment plan and sticking to it.

How to get started

Bankruptcy is not something that you should file for alone. Instead, consult a bankruptcy attorney to help you determine the unique filing requirements of your local bankruptcy court. After filing, you will also need to attend a debtor education class and submit a certificate of completion.