Are you knee-deep in debt? Nobody wants to be in that situation, but sometimes, life just gets in the way. Now, there are measures you can take to reduce your debt and get your finances back in order.

Ways to Resolve Your Debt Problems

If you don’t know how to find solutions to your debt problems, you may suffer from them for years. It can be emotionally draining and costly. Here are some debt solutions you can explore:

1. Debt Forgiveness

Creditors may voluntarily release you of your responsibility to pay what you owe. It sounds easy, but it’s more complicated than simply asking for your debt to be forgiven. 

Not all debts can be forgiven, like child support. Get deep into the details of how debt forgiveness works.

2. Debt Settlement

If you want to get rid of your debt but can’t afford to pay the whole thing, debt settlement is an option. In a settlement, you negotiate with the creditor to reduce the amount you need to pay so that you can settle your account. 

Timelines are important here. For example, you can’t negotiate a settlement after you have been served with a collections lawsuit.

Debt settlement is usually a service offered by a third-party company, which will negotiate and try to reach a settlement agreement with a creditor on your behalf. However, there are ways that you can settle credit card debt yourself if you’re willing to put in the time to learn how.

3. Debt Consolidation

If you owe money to multiple creditors, you can take out one larger loan to pay for them. This is called debt consolidation.

That way you’ll only have one loan to pay, which can lower your monthly payments and interest rates. Your credit score may take a hit for a bit, but you’ll be able to manage your repayments easier.

Check out these best debt consolidation loans if you’re a veteran.

4. Loan Rehabilitation

If you have a student loan and you defaulted on your payments, your debt becomes immediately due. 

Student loan rehabilitation can help you get out of your default status. Find out how it works, if you’re eligible, and the pros and cons of using loan rehabilitation.

5. Disputing Debt

Have you received a notice saying that you owe a creditor a certain amount? Or did you see an unpaid debt on your credit report that you don’t recognize as yours? 

You have the rights to dispute it. If you believe you don’t owe the money or you the amount is incorrect, you can request the collector to send you verification. Follow these steps on disputing a debt using debt dispute letters.

6. Debt Repayment

You can enroll in a debt repayment plan to manage your payments in the best way that works for you. Alternatively, it can be a personal project that you set for yourself to pay off your debt more effectively.

You can also take out money from your 403(b) retirement plan in the form of a loan or withdrawal to pay off your debt. 

While rare, there are some instances where you can apply for a grant to pay off your debt, specifically your student loan.

What Debt Collectors can do to you, and how to Deal with Them

A lot of people get anxious when a debt collector contacts them. Understandably, it can be stressful and draining, but knowing how to handle the situation the proper way can alleviate your worries.


Phone calls are one of the most common ways that collectors use to contact debtors. Should you answer debt collector calls? Yes. No matter how tempting it is to change your number or block the caller, don’t do it. 

You need to answer the call to avoid consequences. However, know that you have rights. If the debt collector calls you multiple times a day, you can send a formal request to stop them from contacting you.


When you have debt, your creditor may repossess some of your properties, such as your car and secured personal property that you set as collateral. 

If you want to avoid repossession, communicate with your lender and try to negotiate a solution. 

If you can’t do anything about it, make sure that the documentation is complete and you’re giving your properties to authorized and legitimate people.

Bank Levy

Your creditor can legally take money from your bank account through a bank levy. Your bank can freeze your account and send money to the creditor to pay your debt. 

They can also levy your account more than once, especially if they didn’t get the full amount you owe the first time. 

To avoid such actions from creditors, you can make arrangements such as opening a bank account that creditors can’t touch

You may also consider negotiating with your creditor. Or if you believe that they’ve made an error, file a dispute.


A creditor can sue you for not paying what you owe. If they win in the court, a garnishment will happen. 

They’ll be allowed to take your money or property, including from prepaid cards that they can find from your credit report. 

Your spouse can be garnished for your debt too, depending on a few factors, such as the state laws, types of debt you have, and your debt obligations. 

Your inheritance and Social Security checks can be at risk too. In general, there’s a belief that your Social Security benefits are safe from collectors, but if you owe federal debts, they can still be garnished.

When creditors win a garnishment, they’ll be required to send you a demand letter. Don’t ignore it. You may still be able to stop the garnishment and negotiate with your creditor a payment plan.

Legal Actions & Lawsuits

When you have debts for a while now, you may receive a notice of legal action against you. 

Most people would be scared, thinking that they’d go to jail for unpaid credit card debt or a payday loan

That’s not going to happen as long as you don’t ignore the lawsuit, so you should know how to answer the lawsuit and summons for your debt.

Creditors don’t often resort to lawsuits, especially if they can collect from through other means and you’re willing to work with them. 

Even when you already received a judgment, you still have options to get out of the judgement, including a settlement with the creditor.


When a creditor wins a court judgment against you, it can place a lien on your property, meaning that it has a legal claim on your assets. 

In some cases, the creditor may pressure you to sell your properties so that they can be paid. Even unsecured creditors who are willing to go the long route can put a lien on your house.

Again, don’t ignore any communications about a lien. To resolve it, you need to settle your debt.

Debt Relief Based on Loan Types

How you can reduce your debt will also depend on the type of loans or debts that you have. Some loan types are quite a huge responsibility to pay back, such as auto loans.

Auto Loan

Emergency expenses or loss of income can make it hard to keep up with your auto loan. If your financial hardship happens immediately after you signed up for the loan deal, you might think of canceling your loan. 

You can’t simply back out of a car loan after signing, but you have a few options, such as refinancing, selling the car, or surrendering it voluntarily for repossession.

Payday Loan

Payday loans are a convenient way to get fast cash when you need it immediately. Unfortunately, if you don’t have the means to pay, you could be trapped in a cycle of renewals and rollovers. 

Know your options to get out of a payday loan – there are legal ways to stop paying high interests on payday loans.

Tax Debt

If you have tax debt, it can get you in financial trouble with the IRS. 

One day, you might find out that you have a tax lien attached to your properties, which means that the government can seize your assets. 

But rather than avoid it or wait for it to go away after the 10-year statute of limitations, you should work with the IRS. 

The agency provides tax debt forgiveness to help you pay off your debt or prove that you’re unable to pay it.

IRS debt is something you need to address, as not even your death will absolve your family’s responsibility for paying off your debt. 

Student Loans

For people that can’t afford to pay for their education while studying, student loans may be a necessity. 

However, it’s important to know how much college debt is too much so that you can avoid defaulting on your payments. 

You can seek student loan debt relief to get out of default, which is particularly important if you plan to go back to school.

Title Loans

If you’re unable to pay back your title loan, you can lose your car in repossession. 

Try to settle your debt as soon as possible to keep your car. You can also renegotiate your title loan terms, although there’s no guarantee that the lender would agree. 

Read more on your options to get out of a title loan legally.

Other topics in Debt Relief: 

Read more: If A Cosigner Dies, What Happens To The Loan?

Read more: Will I Inherit My Parent’s Debt?

If you’d like more personal finance tips, check out our homepage, which links out to guides for other personal finance topics like credit repair, earning more money and more!