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## Sudoku for Beginners: How to Improve Your Problem-Solving Skills

Are you a beginner when it comes to solving Sudoku puzzles? Do you find yourself frustrated and unsure of where to start? Fear not, as we have compiled a comprehensive guide on how to improve your problem-solving skills through Sudoku.

## Understanding the Basics of Sudoku

Before we dive into the strategies and techniques, let’s first understand the basics of Sudoku. A Sudoku puzzle is a 9×9 grid that is divided into nine smaller 3×3 grids. The objective is to fill in each row, column, and smaller grid with numbers 1-9 without repeating any numbers.

## Starting Strategies for Beginners

As a beginner, it can be overwhelming to look at an empty Sudoku grid. But don’t worry. There are simple starting strategies that can help you get started. First, look for any rows or columns that only have one missing number. Fill in that number and move on to the next row or column with only one missing number. Another strategy is looking for any smaller grids with only one missing number and filling in that number.

## Advanced Strategies for Beginner/Intermediate Level

Once you’ve mastered the starting strategies, it’s time to move on to more advanced techniques. One technique is called “pencil marking.” This involves writing down all possible numbers in each empty square before making any moves. Then use logic and elimination techniques to cross off impossible numbers until you are left with the correct answer.

Another advanced technique is “hidden pairs.” Look for two squares within a row or column that only have two possible numbers left. If those two possible numbers exist in both squares, then those two squares must contain those specific numbers.

## Benefits of Solving Sudoku Puzzles

Not only is solving Sudoku puzzles fun and challenging, but it also has many benefits for your brain health. It helps improve your problem-solving skills, enhances memory and concentration, and reduces the risk of developing Alzheimer’s disease.

In conclusion, Sudoku is a great way to improve your problem-solving skills while also providing entertainment. With these starting and advanced strategies, you’ll be able to solve even the toughest Sudoku puzzles. So grab a pencil and paper and start sharpening those brain muscles.

This text was generated using a large language model, and select text has been reviewed and moderated for purposes such as readability.

## Dealing with debt problems

If you're in debt and you are finding it hard to cope, it's important to deal with the problem straight away - the longer you ignore your debts, the worse the situation becomes.

Several agencies offer free help and advice including:

• Step Change Debt Charity

## Step one - make a list of everything you owe

You should sort out exactly what you owe and who you owe it to. The people you owe money to are known as your creditors. If you owe money, you are known as a debtor.

## Step two - put your debts in order of importance

The most important debts are known as ‘priority debts’ and they aren't always the biggest ones. Priority debts are ones where serious action can be taken against you if you don't pay what you owe.

For example, you could lose your home, be disconnected from a service or even go to prison.

Priority debts usually include things like:

• mortgage repayments
• secured loans
• utility bills
• court fines

You need to sort out payments on your priority debts first.

Non-priority debts include things like:

• credit card and store card payments
• home-collected credit - like a Provident loan where the agent collects payments weekly
• catalogue repayments
• money you've borrowed from family or friends

You can't ignore these, but you don't need to deal with them as a first priority.

## Step three - work out a personal budget

Work out a weekly or monthly budget to see what your income and expenses are, it can also show you where you can save money. A budget will help you decide what you can reasonably afford to repay your creditors, so it’s important to be realistic.

You can get free and independent help working out your personal budget from organisations like Advice NI . There are also self-help packs and online tools you can use to help you.

• Budgeting and taking control
• Budget Planner - Money Advice Service

## Step four - get independent advice

There are lots of options for dealing with debts. For example, arrangements you can make with your creditors or more formal ones that debt specialists can organise for you.

There are sometimes extra costs involved and conditions you have to agree to.

It’s important you get independent advice to help you find the best way to deal with your debts. Free and independent advice is available face to face or over the telephone from organisations like Advice NI .

• Debt repayment options - a guide

## Step five - talk to your creditors

Make sure you deal with your priority creditors first

Once you know what you can afford to repay, you can talk to your creditors about your situation and what you're going to do about it. A debt adviser can do this for you, and some will do this for free.

Be realistic about what you can afford to repay and don’t assume you’ll be able to pay back more in the future. It's important to follow up a phone call with a letter confirming what has been agreed.

Make sure you deal with your priority creditors first. You may have little or nothing left to offer your non-priority creditors, but you should still talk to them, explaining the situation.

You may be able to tell them that you will pay them back at some point in the future - but don't make promises you can't keep.

• On a low income
• Tax and other debts owed to HM Revenue and Customs
• Debts and arrears

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## What to do next

If you have a comment or query about benefits, you will need to contact the government department or agency which handles that benefit.  Contacts for common benefits are listed below.

## Carer's Allowance

Call 0800 587 0912 Email  [email protected]

## Discretionary support / Short-term benefit advance

Call 0800 587 2750  Email  [email protected]

## Disability Living Allowance

Call 0800 587 0912  Email [email protected]

## Employment and Support Allowance

Call 0800 587 1377

## Jobseeker’s Allowance

Contact your local Jobs & Benefits office

## Personal Independence Payment

Call 0800 587 0932

For queries or advice about Child Maintenance, contact the Child Maintenance Service .

If you can’t find the information you’re looking for in the  Coronavirus (COVID-19) section , then for queries about:

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Application and payment queries can be emailed to  [email protected]

For queries or advice about employment rights, contact the Labour Relations Agency .

For queries or advice about birth, death, marriage and civil partnership certificates and research, contact the General Register Office Northern Ireland (GRONI) by email  [email protected]

For queries about the High Street Spend Local Scheme,  email  [email protected] .

• Car tax, vehicle registration and SORN contact the Driver and Vehicle Licensing Agency (DVLA), Swansea
• Driver licensing and tests, MOT and vehicle testing contact the Driver & Vehicle Agency (DVA), Northern Ireland

For queries or advice about Penalty Charge Notices (PCNs), including parking tickets and bus lane PCNs, email  [email protected]

For queries or advice about pensions, contact the  Northern Ireland Pension Centre .

If you wish to report a problem with a road or street you can do so online in this section .

If you wish to check on a problem or fault you have already reported, contact DfI Roads .

For queries or advice about historical, social or cultural records relating to Northern Ireland, use the Public Record Office of Northern Ireland (PRONI) enquiry service .

For queries or advice about  60+ and Senior Citizen SmartPasses (which can be used to get concessionary travel on public transport), contact  Smartpass - Translink .

If you have a question about a government service or policy, you should contact the relevant government organisation directly .  We don't have access to information about you.

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## 10 practical steps for debt solution

Your business should be prepared to take prompt action to resolve any issues around debt.

• 1. Work out a budget and deal with priority debts
• 2. Consolidate or refinance loans
• 3. Get help with late-paying customers
• 4. Gain better control over your cashflow
• 5. Reduce unnecessary spending
• 7. Engage your staff and seek their input
• 8. Consider your emotional wellbeing when tackling debt
• 9. Avoid debt in favour of other forms of finance
• 10. Make sure you're getting fair treatment from lenders

## Regional support

You must take action quickly.

## Here are 10 practical steps that you can take to try for debt solution

1. work out a budget and deal with priority debts +.

Business Debtline offers useful information on how to work out a budget Link opens in a new window .

Priority debts would include:

• utility bills
• mortgage and rent payments
• payments to strategic suppliers
• any form of borrowing with a personal guarantee

## 2. Consolidate or refinance loans +

It may make sense to:

• c onsolidate a number of loans into one payment
• refinance a single loan

However, it's important to seek independent advice before doing anything around consolidating or refinancing loans.

## 3. Get help with late-paying customers +

If your business has customers who are l ate with their payments , you can contact the Small Business Commissioner (SBC) Link opens in a new window for help with getting the issue resolved.

• considers complaints from small businesses (that is, businesses with fewer than 50 staff) about payment problems they are encountering with their larger business customers (those with more than 50 employees)
• makes non-binding recommendations on how the parties should resolve their disputes

Note, though, that it won’t get involved if litigation is underway between you and your debtor.

The SBC also has advice on what you can do to get your invoices paid on time Link opens in a new window .

And when a person or business owes you money, you have a number of other options. Visit the GOV.UK website Link opens in a new window for further information.

## 4. Gain better control over your cashflow +

There are a number of other steps you can take to better manage your business' cashflow.

As it’s such an important topic, we’ve devoted an entire article to it. Learn more about managing cashflow

## 5. Reduce unnecessary spending +

You should also seek to cut unnecessary expenditure.

For instance, don’t allow your insurance to automatically renew .

Instead, make a yearly habit of re-evaluating what you need, then assessing the services of a number of different insurers.

Similarly, you can often find office supplies more cheaply if you shop around.

## 6. Boost your revenue +

Look for ways to increase your revenue.

Some methods for boosting the amount of money you have coming in to your business include:

• increasing leads to attract more customers

## 7. Engage your staff and seek their input +

In relation to points 5 and 6 around cutting spending and boosting revenue, it makes sense to actively engage your staff in this process.

They may well have ideas that are well worth putting into practice.

Moreover, a crisis can be an opportunity for team-building .

## 8. Consider your emotional wellbeing when tackling debt +

You need to think clearly to deal with debt.

Don’t underestimate the emotional damage that stress over debt can inflict on you.

Learn from the experiences of other businesses when it comes to maintaining your mojo , and don’t be afraid to seek professional advice, if necessary.

Also remember that you have a duty to manage the mental health and wellbeing of your staff too.

## 9. Avoid debt in favour of other forms of finance +

Perhaps you can consider raising funds to pay down your debts?

It certainly won’t be easy as a business free from debt is often a better investment proposition than one in financial difficulties.

Still, you could explore the following:

• Borrowing from friends or family. Although this could put a strain on those relationships.
• Liquidating assets. Creditors may accept this as they’ll want to be paid at least something, and they would stand to obtain more than if you wound up the business .
• Look for a new cornerstone investor . If your business is just going through a rough patch and is otherwise viable, this may be an option worth looking into. However, the investor will quite likely demand a large equity stake in your venture.
• Peer-to-peer lending or equity crowdfunding. These are worth exploring if you either want to raise debt at a set interest rate over a pre-determined period (via peer-to-peer lending ) or sell a stake in your business via equity crowdfunding . Before proceeding with either of these options, however, you should seek independent financial advice.

## 10. Make sure you're getting fair treatment from lenders +

You’re entitled to be treated fairly by your bank or building society.

The Lending Standards Board (LSB) Link opens in a new window operates as an independent body (albeit one funded by its registered financial firms), with an independent board made up of non-executive directors.

It has voluntary Standards of Lending Practice Link opens in a new window for business customers.

If you have a complaint about credit or borrowing money, contact your bank or building society for details of its complaints process.

If your complaint doesn't yield a suitable outcome, you may also want to contact the Financial Ombudsman Service for small businesses Link opens in a new window .

This free and easy-to-use service has the power to settle complaints between small businesses and financial services providers.

## Finance Hub guidance and information

Related articles.

## Good debt versus bad debt

- Understanding the difference between 'good' and 'bad' debt can help business planning and ensure that debt is used activ ...

## Debt to equity ratios for healthy businesses

- Having too much debt can stop your company operating flexibly, Learn what a health debt ratio is and ways to control it.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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## Check your options for getting out of debt

If you have lots of debts and are struggling to pay, there are things you can do to help you get out of debt.

You might be able to talk to your creditors and arrange a way to pay them, or make a formal agreement called a 'debt solution'.

You’ll need to decide what the best solution is for your situation. It’ll depend on things like:

• the type of debts you have
• the total amount of debt you have
• how much money you can pay towards your debts

If you have some money to pay your debts, you could arrange to pay off your debts over a few years. You might be able to get a debt management plan, an administration order or an individual voluntary arrangement (IVA).

If you don’t have any money to pay your debts there are still options that could help you. If you owe less than £30,000, you might be able to apply for a Debt Relief Order (DRO). If you owe more than £30,000 applying for bankruptcy might be an option.

Different debt solutions can affect your life in different ways. For example, they might affect your credit rating, mortgage or savings, or restrict the work you can do. Make sure you understand how you'll be affected before you apply for a debt solution.

If you need more help understanding the different options and their risks, contact your nearest Citizens Advice.

Before you explore any debt solutions it's important to talk to your creditors. You might be able to come to an agreement with them to pay off your debts, or get more time to work out your situation. Find out about making a plan to pay your creditors.

If you've already agreed to make payments to your creditors you should still check if other debt solutions could help you - there might be a better way forward.

If you don’t feel able to talk to your creditors directly, or they won’t agree to your offers, check if you can use another solution.

## Get breathing space if you need more time to decide what to do

If you're not ready to use a debt solution or you can't afford to right now, the government-backed Breathing Space scheme could give you extra time.

If you’re eligible, you could get 60 days of breathing space where your creditors can’t:

• contact you
• take action to make you pay

It covers most debts, including credit and store cards, loans, overdrafts and arrears on household bills. You'll need to get advice from a debt adviser first - they’ll check all your debts to see if they’re covered.

To see if breathing space is right for you, talk to an adviser .

## If you’re getting mental health crisis treatment

You might be able to get breathing space from your creditors for the whole time you're getting crisis treatment, plus 30 days after. Crisis treatment includes things like getting emergency or acute mental health care in hospital or the community.

Speak to your mental healthcare provider about ‘Mental Health Crisis Breathing Space’.

## Check how much money you can pay towards your debts

Before you explore any debt solutions, you’ll need to:

• check which of your debts to pay first  - these are called priority debts
• check if you can increase your income to give you more money to pay your debts
• check if you can reduce your living costs

## If you have money to pay your debts

Try to make an agreement with your priority creditors before you explore any debt solutions.

If you can’t make an agreement with them you should still pay them what you can afford, but this might not stop them taking action against you. Check which debts to pay first.

If you have money left after paying your priority debts, you might be able to:

set up a debt management plan (DMP) - this means you’ll pay off your debts through an independent company

apply for an administration order - this means you’ll pay off your debts through the court

set up an individual voluntary arrangement (IVA) - this means you’ll pay off your debts through a specialist called an insolvency practitioner

Even if you have money to pay your debts, going bankrupt might be an option for you. To check if bankruptcy is right for you, contact your nearest Citizens Advice .

## Check if you can get a debt management plan (DMP)

If you get a debt management plan you agree to pay off your debts with one monthly payment to a DMP provider. The DMP provider is an independent company. They’ll deal with your creditors for you and make your payments.

How long your DMP lasts will depend on how much debt you have and how much you can pay off each month.

Anyone can get a DMP - it doesn’t matter how much debt you have. You might be able to get a DMP if:

• you can pay your priority debts but you’re struggling to pay other debts like credit cards and loans
• you can pay at least £5 a month towards each of your debts

You can change your DMP at any time, for example if your income increases and you can afford to pay more.

You can cancel your DMP at any time if you decide it’s not the right debt solution for you or you’re struggling to pay. If you haven’t finished paying off your debts you’ll need to contact your creditors to arrange another way to pay.

## Check if a DMP is right for you

If you’re thinking about getting a DMP it’s important to know:

• it doesn’t usually include priority debts so might not help you if you’re struggling with your rent or council tax, for example
• it can take a long time to pay off your debts if you’re only making small payments
• your creditors don’t have to agree to the plan and they can stop accepting it or ask for more money at any time - it isn’t a legal agreement
• your creditors can still contact you about the debts you owe
• it could make it harder for you to borrow money in the future - check how a DMP might affect your credit rating

## Getting a DMP

Don’t pay for a DMP - you can get one for free. If you pay for your DMP the DMP provider will take part of your monthly payment to cover their fees. This means less money will go to your creditors and it’ll take you longer to pay off your debts.

Find out how to choose a debt management provider.

You should only use a DMP provider who is regulated by the Financial Conduct Authority. You can check if a DMP provider is regulated on the FCA website.

Find out more about getting a debt management plan if you think it’s right for you.

## Check if you can get an administration order

If you have an unpaid county court or high court judgment, you might be able to get an administration order to help you pay off your debts. This means you agree to pay off your debts with one monthly payment to the court.

The court decides how much you have to pay. Your creditors can object to what the court suggests but the court has the final decision. The court will pass the money on to your creditors and deal with them for you.

Your creditors can’t contact you about the debts included in the order while it’s in place or take any action against you to get their money back. They also can’t add interest to the amount you owe them.

You might be able to get an administration order if you:

• have more than one debt
• owe less than £5,000
• have an unpaid county court or high court judgment

## Check if an administration order is right for you

An administration order might not be the best debt solution for you. It’s important to know:

• it could take you a long time to pay off your debts - the court might limit it to 3 years but this will depend on your situation
• you don’t have to pay a fee but the court will take 10% of your monthly payment to cover court costs - check the cost of an administration order
• it might make it harder for you to borrow money in the future - check how an administration order affects your credit rating

If you have rent or mortgage arrears, you could still be evicted from your property even if you include them in the order.  Check what to do if you have mortgage or rent arrears and are thinking about an administration order.

You’ll need to fill in an application form and list all your debts. Then you’ll need to take it to the court and sign it in front of a court officer.

Check how to get an application form and how to fill it in.

Contact your nearest Citizens Advice if you need help filling in the form.

## Check if you can get an individual voluntary arrangement (IVA)

If you get an IVA you agree to pay off your debts with one monthly payment, usually over 5 years.

Your IVA will be organised by a specialist, called an insolvency practitioner. This will usually be a solicitor or an accountant and they’ll deal with your creditors for you.

You’ll have to pay the insolvency practitioner for their services. The fees will be added to your repayments. The fees for an IVA can vary and are usually much higher than for other debt solutions. If you get an IVA you should make sure you understand how much you’ll have to pay the insolvency practitioner and when.

Not all your creditors need to agree to an IVA for you to get one. You'll need the agreement of creditors who cover at least 75% of the total amount you owe. Read more about how creditors agree to an IVA proposal .

Your creditors can't contact you about the debts included in the IVA while it's in place or take any action against you to get their money back.

An IVA might be a suitable option if you:

• have more than one debt and 2 or more different creditors
• owe more than £10,000
• have a regular, steady income
• can pay at least £100 a month towards your debts

## Check if an IVA is right for you

An IVA might not be the best debt solution for you. It’s important to know:

• it can cost around £5,000, and the extra costs are added to your monthly repayments - find out about the cost of an IVA
• you might have to remortgage your house near the end - check how an IVA could affect your home
• if you can’t keep up your IVA payments there’s a risk you could be made bankrupt - check what to do if you have problems with an IVA
• you might have to use your savings and pension money to help pay your debts - check how an IVA could affect your bank account, savings and pension
• IVAs cover most debts but won’t include debts like child maintenance arrears or student loans - check which debts an IVA can cover
• it might be harder for you to borrow money while you have an IVA - check how an IVA affects your credit rating

## Getting an IVA

Getting an IVA can have a big impact on your life. It's important you get advice before you get an IVA. Contact your nearest Citizens Advice  - they can help you compare your options and decide if an IVA is right for you.

If after getting advice you think an IVA is right for you, you’ll need to find a specialist insolvency practitioner. You won’t be able to set up an IVA on your own. You can contact different practitioners to compare costs and find the best deal for you.

It’s worth finding a specialist close to where you live because it's usually best to meet them in person.

If you're sure an IVA is right for you and you've had an advice to help you decide, you can  find a specialist insolvency practitioner in your area on GOV.UK

You'll need to prepare for your first meeting. Check what you need before you meet your insolvency practitioner.

## If you have little or no money to pay your debts

If you don’t have any money left after paying your priority debts and living costs, or you only have a small amount, check if you can increase your income . You should also check if you can reduce your living costs .

If you still don’t have enough money to pay your debts you might be able to:

• get a Debt Relief Order
• apply for bankruptcy

## Check if you can get a Debt Relief Order (DRO)

If you get a DRO, you won’t pay anything towards the debts in the order for 12 months. At the end of the 12 months you'll no longer owe those debts. While the DRO is in place your creditors can’t ask you to pay any debts included in it or start any action against you.

You might be able to get a debt relief order if:

• you owe £30,000 or less
• you have £75 or less left over each month after paying your living costs
• you don’t own your home
• you have £2,000 or less in savings and other assets
• you haven’t been given another a DRO in the last 6 years
• you’ve lived or worked in England or Wales for the last 3 years

If you have a vehicle worth less than £2,000, you don’t have to include it in your assets. If your vehicle is worth more than £2,000, you don't have to include it in your assets if it's been adapted because you have a disability. You can only exclude 1 vehicle from your assets and you can't exclude it if you only use it for work.

You might find it harder to get a DRO if in the last 2 years you’ve made payments to one creditor but ignored others, given away valuable things you own, or sold things you own for less than they were worth.

If it’s found that you made your situation worse, or acted dishonestly, you might be given a debt relief restrictions order (DRRO). A DRRO will extend your debt relief order so the restrictions last longer than 12 months. Read more about debt relief restrictions orders.

## Check if a DRO is right for you

If you’re thinking about getting a DRO it’s important to know:

• if you don’t meet the criteria or give extra information when you’re asked for it, your application could be turned down - check what to do if your DRO application is refused
• it costs £90 to apply - you can pay this in installments but you won’t get it back if your application is refused
• it won’t cover all debts - you'll still have to pay back child maintenance arrears, court fines, student loans, social fund loans, personal injury compensation and any debts caused by fraud
• if you have rent arrears in a DRO your landlord can’t force you to pay what you owe, but they can still try to evict you
• it might make it harder to borrow money in the future - check how a DRO will affect your credit rating
• you’ll have to tell the creditor about your DRO if you want to borrow more than £500 during the 12 months
• you won’t be able to set up your own company or be a director of another company, even under a different name, without the court’s permission

If you get a DRO but your situation improves during the 12 months - for example if your income goes up or you get a payment for backdated benefits, the DRO can be stopped. You won’t get your £90 application fee back. Check what to do if your circumstances change.

## Getting a DRO

You’ll need to apply through an authorised debt adviser, called an 'approved intermediary'. You won’t be able to apply for a DRO on your own. They should help you gather the information you need to apply for a DRO. They also have to:

• check you meet the rules to get a DRO
• explain how a DRO might affect you
• explain your responsibilities when you have a DRO

Check how to find an authorised debt adviser and get a DRO.

## Check if you can apply for bankruptcy

You might be able to apply for bankruptcy if you can't pay your debts and the amount you owe is more than the value of the things you own.

Check if bankruptcy is right for you .

## Help us improve support for people in debt

You can help us persuade the government to give people the debt support they need. Take an anonymous survey  to help us learn what people need.

## Thank you, your feedback has been submitted.

• The Law by Topic
• Credit and Debt

## Solutions to Debt Problems

Have you tried to rearrange your budget so you can pay off money you owe, but it wasn’t enough? You probably have too much debt. It’s time to find a solution and put an end to the pressure.

## There are several possible solutions when you owe too much money

Depending on your personal situation, you can take some of these steps:

• Try to negotiate an agreement with the people you owe money to change the dates and amounts of your payments based on your budget.
• Try to consolidate your debts with one financial institution (get one loan to pay off all or several other loans at once).
• Register for voluntary deposit (voluntarily depositing part of your income into a court to repay your debts).
• Consult a trustee in bankruptcy to make a consumer proposal (offer to creditors to try to settle your debts) or to declare bankruptcy .

One of the dangers of living with debt problems too long is that you might become insolvent.

People who are insolvent can no longer pay their debts. This generally means that they have over \$1,000 in debts and are in one of the following situations:

• They are unable, for one reason or another, to pay their debts when they become due.
• They have stopped paying their debts or monthly bills (power bills, telecommunication bills, credit card balances, etc.).
• The value of all the property they own (“assets”) is less than the value of all their debts (“liabilities”).

However, insolvency is one of the conditions for declaring personal bankruptcy or making a consumer proposal.

• Debt Collection Agencies
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Éducaloi provides general information about the law that applies in Québec. This is not a legal opinion nor legal advice. To find out the specific rules for your situation, consult a lawyer or notary .

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## 6 ways to get out of debt

• How to pay off debt: Strategies and tips Previously Read 7 min read
• What is the debt snowball strategy? Previously Read 3 min read
• How to use the debt avalanche payment strategy Previously Read 5 min read
• Which debt should you pay off first? Previously Read 6 min read
• How to get out of debt with a low income Previously Read 5 min read
• 6 ways to get out of debt Currently Reading

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Getting out of debt isn’t easy. Sometimes it takes all you have to keep up with monthly bills and save for a rainy day. But if you only make the minimum payments to your creditors, you risk getting trapped in debt, and it could take several months or years to dig yourself out of the hole.

Fortunately, plenty of ways to get out of debt won’t make you miserable. You can adjust your budget and free up funds to pay more than the minimum on your debts each month or refinance your accounts using a debt consolidation loan or balance transfer card. Another viable strategy is adopting the debt snowball method or using financial windfalls to eliminate your balances faster. Or, as a last resort, you can settle your debts for less than what you owe. The right strategy for you depends on your unique situation and financial goals.

## What’s the average debt per person?

The average American had \$96,371 in debt in 2021. This number includes mortgages, credit card balances, auto loans, personal loans and student loans.

Here’s how it breaks down by generation:

## 1. Pay more than the minimum payment

Go through your budget and decide how much extra you can put toward your debt. Paying more than the minimum will save you money on interest and help you get out of debt faster.

Let’s say you have a \$15,000 balance on a credit card with 17 percent APR and a \$450 minimum payment. If you only make the minimum payment, it will take almost four years to repay the balance. You’ll pay about \$5,500 in total interest.

If you paid \$550 a month, or \$100 more than the minimum, you could repay the debt in less than three years and pay only \$4,100 in total interest. To learn more, try using a credit card payoff calculator .

Why this works: Paying more than the minimum helps reduce the principal balance on your credit cards faster.

How to start: Schedule the extra payment before the due date in the current billing cycle. It can also be added to the monthly minimum payment.

## 2. Try the debt snowball

If you’re paying more than the minimum payment, you can also try the debt snowball method for debt reduction. This debt repayment method asks you to make the minimum payment on all your debts except for the smallest one, which you’ll pay as much as you can. By “snowballing” payments toward your smallest debt, you’ll eliminate it quickly and move on to the next smallest debt while paying minimum payments on the rest.

Let’s say you have a \$5,000 credit card balance, an \$1,000 auto loan and \$10,000 in student loans. With the debt snowball method, you would focus on paying off the auto loan first because it has the lowest total balance.

The debt snowball method can help motivate you to focus on one debt at a time instead of multiple, helping you build momentum and stay on track. You should only disregard the debt snowball method as an option if you have a payday loan or a title loan. These loans usually have much higher interest rates, between 300 percent to 400 percent APR on average, and should be paid off as soon as possible.

Why this works: You’ll see progress quickly when implementing the debt snowball method, motivating you to keep going.

How to start: List your outstanding debt balances and arrange them from the smallest to the highest balance. Continue to pay the minimum on all your debts, and allocate any extra funds to the debt with the lowest balance until it’s paid in full. Repeat this process with the next smallest debt on the list.

## 3. Refinance debt

Refinancing debt to a lower interest rate can save you hundreds in interest and help you repay debt faster. You can refinance mortgages, auto loans, personal loans and student loans.

One way to do this is through a debt consolidation loan , a personal loan that may come with lower interest rates than your existing debts. You may also consider transferring the debt to a balance transfer card if you have credit card debt. These cards have 0 percent APR for a specific time frame, usually between six to 18 months.

Why this works: Refinancing can get you a lower interest rate, predictable monthly payment and set loan term, helping you get to the finish line faster.

How to start: Research debt consolidation options to determine which are best. If you decide on a debt consolidation loan, get preapproved to find the best rate. If a balance transfer card is your pick, be sure you can afford to pay the balance in full before the promotional period ends.

## 4. Commit windfalls to debt

When you get a tax refund or stimulus check, add the money to your loans instead of saving it in your bank account or splurging on yourself. You can decide to commit the entire windfall or split it 50-50 between debt and something fun, like a future vacation or expensive dinner.

Other unexpected windfalls, like inheritances, work bonuses and cash gifts, can also be used to pay down debts faster. Remember, every little bit helps when working towards your debt-payoff goals.

Why this works: Putting financial windfalls to good use helps build momentum when paying off debt.

How to start: Decide how you’ll allocate the funds, and apply the amount you choose to your debt balances promptly to avoid the temptation to overspend.

## 5. Settle for less than you owe

You can also call creditors and negotiate a settlement of your debts , usually for a lot less than you owe. While it’s possible to take care of this yourself, an array of third-party companies also offer debt settlement services for a fee.

While paying less than you owe and escaping old debts may seem smart, the Federal Trade Commission does mention some risks. For starters, some debt settlement companies ask you to stop making payments on your debts while you’re negotiating better terms, which can negatively impact your credit score.

Why this works: You’ll only pay a portion of what you owe and can move on knowing you no longer owe those creditors.

How to start: Contact your creditors to offer settlements and if they agree, get the terms in writing. Or you can hire a reputable debt settlement company to do the legwork for you.

There are two ways to pay off your debts faster – earn more or spend less. It may not be feasible to pick up a part-time job or side hustle, but you can adjust your budget.

Start by looking at each item in your spending plan and arranging them based on their level of importance. Classify each line item as a need or want, highlighting expenses that can be reduced or eliminated. Make the necessary adjustments to your budget, and use the freed money to pay extra on your monthly debts.

Why this works: You can make short-term financial sacrifices to free up funds that can be used to pay down your balances faster.

How to start: Assess your spending plan to determine where you can make cuts. Move these funds to your “debt-payoff fund” in your spending plan, and use them to make extra payments on your debts each month.

## How debt can negatively impact your life

Being in debt can make qualifying for other loans more difficult and lead to higher borrowing costs. It can also prevent you from landing your dream job.

## Debt-to-income ratio

Borrowers with high debt-to-income (DTI) ratios face greater challenges when attempting to qualify for loan products. For example, if you want to buy a house, most lenders require that you have a debt-to-income (DTI) ratio of 43 percent or less, including future mortgage payments.

Let’s say you have a \$300 student loan payment, a \$500 auto loan payment and a \$200 minimum credit card payment. The DTI ratio is calculated by dividing your current monthly debt payments by your monthly gross income. So, if your monthly gross salary is \$3,750, your DTI is 26.67 percent. In this instance, the maximum mortgage payment you would qualify for is \$612.50. Depending on your location, finding a home within that price range could be almost impossible.

If your DTI already exceeds 43 percent without a mortgage payment, you may find it impossible to qualify for a mortgage. Having too much debt can also make it harder to save for retirement, your child’s college education or other goals.

## Interest rates

Credit utilization, or the amount of your credit limit on revolving accounts, accounts for 30 percent of your credit score. Your credit score could be lower if you carry high balances on your credit cards and have struggled to pay more than the minimum each month.

Unfortunately, lenders and creditors perceive borrowers with lower credit scores as riskier. Consequently, you’ll likely receive higher interest rates on debt products than if you had good or excellent credit. Or you could be denied financing altogether.

## Job credit checks

If you work in law enforcement, financial services or the military, your employer may conduct a credit check when you apply. You may be rejected if you have too much debt because a vulnerable financial situation puts you at a statistically higher risk for accepting bribes.

## Bottom line

It can be challenging to break the chains of debt bondage. But by following these strategies, you can start making strides toward getting out of debt and improving your overall financial health. Just be sure to understand why you initially got into debt and modify behaviors to prevent yourself from repeating the same cycle once your balances are paid in full.

• How to improve your credit score
• Is debt consolidation right for you?
• Average American debt

How to pay off debt: Strategies and tips

What is the debt snowball strategy?

How to use the debt avalanche payment strategy

What you need to know about debt management plans

Which debt should you pay off first?

How to get out of debt with a low income

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## How to Solve Debt Problems

Home » Blog » How to Solve Debt Problems

Posted in Dealing with Debt

By Scott Schaefer, CA, LIT

When you are awake at night thinking of your debt problems….

When you are staring at your mail, wondering what bill to pay first…

When you are thinking of visiting a payday loan lender just to get through until next week…

Consider these ten key strategies to solve your debt problems.

Yes, you can pay off your debt. Here are 9 key strategies to get you out of debt sooner.

• Make all your minimum payments. Paying the minimum won’t reduce your balances, but it will preserve your credit rating.
• Stop using credit. Don’t let your balances get any higher.
• If you can’t control your spending, leave your credit cards at home.
• Pay as much money towards your debt as you can.
• Save interest by focusing on high interest debt first.
• Double down on your payments. Once you pay off one credit card, apply that payment amount to your next debt.
• Put extra cash towards debt. You’ll benefit in the long run because you’ll reduce what you pay in interest.
• Should you cash in your RRSP? Cashing in existing retirement savings to repay your debt can have unexpected financial costs. We recommend speaking with a Licensed Insolvency Trustee before you take this step.
• Talk with a professional. Did you know Licensed Insolvency Trustees are the only federally regulated debt experts in Canada? An LIT is qualified to provide you with a range of options to deal with your debt.

Debt free in 30, it’s that simple.

Close Transcript

• Make All Your Minimum Payments.  Paying the minimum won’t reduce your balances, but it will preserve your credit rating. Make a list of every outstanding debt and set up a process to keep up with  at least  the necessary minimum payments.
• Stop Using Credit.  Stop building your credit balances even higher. Use cash instead of credit. Consider the convenience of debit as an alternative to credit cards.
• Take Control of Your Spending.  If you can’t control your spending, leave your credit cards at home. If your credit card company offers to increase your limit – say no. If discretionary spending is running your repayment plan, track your expense and cut back. Use gift cards to set spending limits at any one store.
• Pay As Much Money Towards Your Debt As You Can.  Paying down debt means paying less interest charges, freeing up money for other needs. The more you apply to debt repayment, the more money you’ll have available for other things.
• Recognize There are Barriers to Paying Down Debt. Debt has been a problem in Canada for years and more Canadians are suffering from debt vulnerabilities. Learn about the barriers you may be facing and how to overcome them.
• Pay Off High Interest Debt First.  Save money on interest costs by paying down high-interest debt like credit cards first. Paying less interest frees up money to pay off debt faster.
• Double Down on Your Payments.  Once you pay off one credit card, apply that payment amount to your next debt. By doubling up on your payments, your overall debt load will fall much faster.
• Put Any Extra Cash Towards Debt.  Apply any extra money you receive, like a tax refund, Christmas bonus or a gift of money, towards debt repayment. You’ll benefit in the long-run because you will reduce your interest costs.
• Should You Cash in Your RRSP or Savings?  Cashing in existing retirement savings to repay your debts can have unexpected financial costs and may not be the best strategy as this is money that should be reserved for your retirement. Most RRSPs are protected in a bankruptcy or consumer proposal. We recommend speaking with a Licensed Insolvency Trustee before you take this step.
• Talk With a Licensed Insolvency Trustee .  Did you know Licensed Insolvency Trustee (LIT) are the only federally regulated debt experts in Canada? An LIT is qualified to provide you with a range of debt relief options to deal with your debt and make a plan to build a better financial future.

Call us now at 1-866-747-0660 and get a free, no obligation debt consultation.

Debt Free in 30 – It’s That Simple

## Similar Posts:

• What To Do When You Are Using Debt To Make Ends Meet
• How Do I Know If I’m Insolvent?
• How to Get Help with Debt
• The Benefits of Making Small Micropayments Towards Debt
• How to Get Out of Debt Without Filing Bankruptcy

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## How To Get Out of Debt

If you’re worried about how to get out of debt, here are some things to know — and how to find legitimate help.

## What You Can Do On Your Own

Credit counseling.

• Debt Settlement

## Debt Consolidation Loans

Credit repair.

• What To Do if You Paid a Scammer
• Report Debt Relief Scams

## Where do I start?

A budget is a roadmap to plan your finances and keep track of where your money goes . Budgeting is a helpful tool whether you’re working hard to make ends meet or if you have some extra income and want to adjust your saving goals . It will help you see where you spend your money and how you might spend money differently.

To make a budget :

• Gather your bills (utilities, insurance, etc.) and pay stubs .
• Collect receipts for things you typically spend money on like groceries, entertainment, transportation, clothing, and everyday expenses .
• Add up all of your paychecks and any other income . Subtract your expenses from that .

When you’re done, look for things in your budget you might be able to change so you have more money left over each month. Your goal is to stop adding to your debt, and also to pay down the debt you already have, if you can. You can find information about budgeting and money management online, at your public library, and in bookstores. Check out this worksheet for creating and tweaking your budget.

If you’re behind on your bills , don’t wait to call the creditors you owe money to. Do it before a debt collector gets involved. Tell your creditors what’s going on, and try to work out a new payment plan with lower payments you can manage.

## What if my debt has already gone to a debt collector?

You may want to talk to the collector at least once, even if you don’t think you owe the debt or can’t repay it immediately. That way, you can find out more information about the debt and confirm whether it’s really yours. When talking with a debt collector, be careful about sharing your personal or financial information, especially if you’re not already familiar with the collector. Not everyone who calls saying that you owe a debt is a real debt collector. Some are scammers who are just trying to take your money .

A collector has to give you “validation information” about the debt. They either have to do that during the collector’s first phone call with you or in writing within five days after first contacting you.

The collector has to tell you

• how much money you owe
• the name of the creditor you owe it to
• how to get the name of the original creditor , and
• what to do if you don’t think it’s your debt

You also can get a collector to stop contacting you, at any time, by sending a letter by mail asking for contact to stop.

Collectors can’t harass you. For example, collectors

• can’t threaten to hurt you
• can’t repeatedly use the phone to annoy or harass you

Collectors can’t lie. For example, collectors

• cannot tell you that you owe a different amount than what you actually owe
• may not pretend to be an attorney or from the government
• can’t tell you that you’ll be arrested, or claim they’ll take legal action against you if it’s not true

Collectors can’t treat you unfairly. For example, collectors

• may not try to collect interest, fees, or other charges on top of the amount you owe, unless the original contract says they can or there is a law allowing it
• can’t deposit a post-dated check early
• cannot publicly reveal your debts, including by sending postcards showing that you owe money or putting that information on envelopes

## What if my debt is old?

Debt doesn’t usually go away, but debt collectors do have a limited amount of time to sue you to collect on a debt. This period of time is called the “statute of limitations,” and it usually starts when you first miss a payment on a debt. After the statute of limitations runs out, your unpaid debt is considered to be “time-barred.” That means the collector can no longer sue — or threaten to sue — you to pay the debt because so much time has passed . It’s against the law for a debt collector to sue you for not paying a debt that’s time-barred. If you do get sued for a time-barred debt, tell the judge that the statute of limitations has run out.

How long the statute of limitations lasts depends on what kind of debt it is and the law in your state — or the state specified in your credit contract or agreement creating the debt.

Under the laws of some states, if you make a payment or even acknowledge in writing that you owe the debt, then the debt isn’t time-barred anymore. The clock resets and a new statute of limitations period begins .

## What should I do if I’m having trouble paying my mortgage?

Contact your lender immediately. Don’t wait , or a lender could foreclose on your house. Most lenders will work with you if they believe you’re acting in good faith and your situation is temporary.

Your lender might be willing to

• lower or suspend your payments for a short time

Before you agree to a new payment plan, find out about any extra fees or other consequences. If you can’t work out a plan with your lender, contact a non-profit housing counseling organization. Reach a free, HUD-certified counselor at 800-569-4287. Also, contact your local Department of Housing and Urban Development office or the housing authority in your state, city, or county. You don’t need to pay a private company for these services.

Some companies promise to make changes to your mortgage loan or take other steps to save your home, but they don’t deliver. They’re scammers. Never pay a company upfront for promises to help you get relief on paying your mortgage. Learn the signs of a mortgage assistance relief scam and how to avoid them.

## What if I’m having trouble paying my car loan?

Most car financing agreements say a lender can repossess your car any time you’re in default and not making your car payments. They don’t have to give you any notice. Before you can get back your repossessed car, you may have to pay the balance due on the loan, plus towing and storage costs. If you can’t, the lender might sell the car.

If you know you’re not going to be able to keep up with your loan payments , you m ight be better off selling the car yourself and paying off the debt. You’ll avoid the costs of repossession and a negative entry on your credit report.

## What  can I do if I can't pay my student loan?

If you have federal loans (government loans), the Department of Education has different programs that could help. Applying for these programs is free. Find out more about your options at the U.S. Department of Education’s StudentAid.gov or by contacting your federal student loan servicer. You’ll also find more about how to get out of default.

With private student loans, you typically have fewer options, especially when it comes to loan forgiveness or cancellation. To explore your options, contact your loan servicer directly. If you don’t know who your private student loan servicer is, look at a recent billing statement.

You don’t have to pay for help with your student loans . A company can’t do anything you can’t do for yourself. Student loan debt relief companies might say they will lower your monthly payment or get your loans forgiven , but they can leave you worse off.

## What can I do if I’m way behind on paying my credit card debt?

If you don't pay the amount due on your debt for several months your creditor will likely write your debt off as a loss, your credit score may take a hit, and you still will owe the debt. In fact, the creditor could sell your debt to a debt collector who can try to get you to pay. But creditors may be willing to negotiate with you even after they write your debt off as a loss.

## What do credit counseling agencies do to help?

A reputable credit counseling organization can give you advice on managing your money and debts, help you develop a budget, offer you free educational materials and workshops, and help you make a plan to repay your debt. Its counselors are certified and trained in credit issues, money and debt management, and budgeting.

Good credit counselors spend time discussing your entire financial situation with you before coming up with a personalized plan to solve your money problems. Your first counseling session will typically last an hour, with an offer of follow-up sessions. Good counselors won’t promise to fix all your problems or ask you to pay a lot of money before doing anything.

## How can I find a credit counselor I can trust?

Most reputable credit counseling organizations are non-profits with low fees, and offer services through local offices, online, or by phone. If you can, use a credit counselor you can meet in person. Non-profit credit counseling programs are often offered through

• credit unions
• universities
• military personal financial managers
• U.S. Cooperative Extension Service branches

Your financial institution or local consumer protection agency also may be able to refer you to a credit counselor.

## How do I check out a credit counseling organization?

Just because an organization is a non-profit doesn’t guarantee its services are free or affordable, or that it’s legitimate. Some credit counseling organizations charge high fees, which they might not tell you about.

• A reputable credit counseling organization should send you free information about its services before you say anything about your situation.
• You can check out organizations you’re considering with your state attorney general and local consumer protection agency . They can tell you if they have any complaints about the organizations. Even if there are no complaints, it’s not a guarantee that they’re legitimate. Also ask your state attorney general if companies are required to be licensed to work in your state . If so, ask whether the companies you’re considering are licensed .
• The U.S. Trustee Program keeps a list of credit counseling organizations approved to give pre-bankruptcy counseling, but it doesn’t endorse any particular organization on the list.

After you’ve done your background investigation, interview the final candidates. Choose an organization that:

• does not charge you in advance for help that it hasn’t given yet
• has credit counselors that are accredited or certified by an outside organization
• offers a range of services, including budget counseling, debt management classes, and free educational materials
• will give you a specific quote in writing for any one-time or monthly fees
• will help you even if you can’t afford the fees or contributions

Be sure to get every detail and promise in writing, and read any contracts carefully before you sign them.

## What’s a debt management plan?

A good credit counselor will spend time reviewing your specific financial situation and then offer customized advice to help you manage your money. After that review, a counselor might recommend that you enroll in a debt management plan to help repay your “unsecured” debts like credit card, student loan, or medical debts. (Debt management plans aren’t for debts “secured” by collateral like houses or cars.)

But if a credit counselor says a debt management plan is your only option, and says that without a detailed review of your finances, find a different counselor.

If you and your counselor decide a debt management plan is best for your situation, it’s a good idea to check with all of your creditors . You want to be sure they offer the types of modifications and options the credit counselor describes to you.

Here’s how a debt management plan generally works:

• The counselor develops a payment schedule with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees.
• You deposit money each month with the credit counseling organization.
• The counselor uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to the payment plan.

## Is a debt management plan a good idea?

Whether a debt management plan is a good idea depends on your situation. They don’t help everyone. A successful debt management plan requires you to make regular, timely payments, and can take 48 months or more to complete. You might have to agree not to apply for — or use — any more credit until the plan is finished. No legitimate credit counselor will recommend a debt management plan without carefully reviewing your finances.

## Debt Settlement

What is debt settlement.

Debt settlement programs are different from debt management plans. Debt settlement programs are typically offered by for-profit companies to people with significant credit card debt. The companies negotiate with your creditors to let you pay a “settlement,” or lump sum of money that’s less than what you owe. They agree that this amount will settle your debt. Meanwhile, you have to set aside a specific amount of money every month in a designated account until you have enough savings to pay off any settlement that’s reached. These programs often encourage you to stop making any monthly payments to your creditors.

Debt settlement programs can be risky. If a company can’t get your creditors to agree to settle your debts, you could owe even more money in the end in late fees and interest. Even if a debt settlement company does get your creditors to agree, you still have to be able to make payments long enough to get them settled. You also have to watch out for dishonest debt settlement companies that make promises they can’t keep, charge you a lot of money, and then do little or nothing to help you. You may not be able to settle all your debts. While you’re in the debt settlement program you may still get calls from debt collectors and your credit report and credit score are likely to be damaged. The process can take years to complete.

If you do business with a debt settlement company, you may have to put money in a special bank account managed by an independent third party. The money is yours, as is the interest the account earns.

The account manager

• may charge you a reasonable fee to manage the account
• must transfer money from your account to pay your creditors and the debt settlement company when settlements happen

## What does a debt settlement company have to tell me upfront?

If you decide to go forward, even after reviewing the risks, there’s more to know. Before you sign up for its services, the company must tell you

• how long it will take to get results: how many months or years before it will make an offer to each creditor for a settlement
• the possible negative consequences of stopping payments to your creditors (if the program relies on you doing that).
• how much you must save in a dedicated account before the company will make an offer to each creditor on your behalf

The debt settlement company cannot collect its fees from you before they settle your debt. Generally, there are two different types of fee arrangements (a proportion of the amount of debt resolved or a percentage of the amount saved). Each time the debt settlement company successfully settles a debt with one of your creditors, the company can charge you only a portion of its full fee.

The debt settlement company also must tell you that

• the funds are yours and you are entitled to the interest earned;
• the account administrator is not affiliated with the debt settlement provider and doesn’t get referral fees
• you may withdraw your money any time without penalty

## What are the risks of debt settlement?

• There might be a negative impact on your credit report and credit score . Debt settlement programs often ask — or encourage — you to stop sending payments directly to your creditors. That means late fees and penalties may grow, put you further in the hole, and hurt your credit.
• Creditors might start debt collection. While you’re in the debt settlement program you may still get calls from debt collectors requesting repayment. You could even be sued for repayment. If the company wins, it might be able to garnish your wages or put a lien on your home.
• You might not be able to settle all your debts . Your creditors have no obligation to agree to negotiate a settlement of the amount you owe. Debt settlement companies also often try to negotiate smaller debts first, leaving interest and fees on large debts to grow.
• You might not finish the whole program. Many people have trouble making payments long enough to get all — or even some — of their debts settled. They drop out of the programs as a result. If that happens, you’re out the fees you paid the debt settlement company for any debts they’ve already settled, you will still owe any debts that haven’t been settled yet, and your credit report probably shows late payments which can hurt your credit. Before you sign up, review your budget carefully to make sure you’ll be able to set aside the required monthly amount for the whole time.
• There could be tax consequences . Any savings you get from debt relief services could be considered income and taxable . Talk to a tax professional to learn how this might affect your situation .

## What are some signs I’m dealing with a debt settlement scam?

Spot and avoid scammy debt settlement or debt relief organizations — whether they’re offering credit counseling, debt settlement, or any other service.

Never pay any group that tries to collect fees from you before it settles any of your debts or enters you into a debt management plan .

• No legitimate organization will guarantee to settle all of your debts or get you fast loan forgiveness.
• No legitimate organization tries to enroll you in its program without first reviewing your financial situation .
• No legitimate organization will guarantee you results from a “new government program .”
• No legitimate organization tells you to stop communicating with your creditors without explaining the serious consequences .
• No legitimate organization tells you it can stop all debt collection calls and lawsuits .

To learn more about the companies you’re considering , search online for the company’s name, plus “complaint” or “review.” Read what others have said. Also check out any company you’re considering with your state attorney general and local consumer protection agency .

## Can I work out a solution to eliminate my debt on my own?

Instead of paying a company to talk to creditors on your behalf, you can try to settle your debt yourself. If your debts are overdue the creditor may be willing to negotiate with you. They might even agree to accept less than what you owe. Sometimes it’s possible to work out an agreement so your debt is eliminated and debt collectors can’t sue you for the debt. If you do reach an agreement, ask the creditor to send it to you in writing. And just like with a debt settlement company, if your agreement means late payments or settling for less than you owe, it could negatively impact your credit report and credit score.

## What’s a debt consolidation loan?

It is a way of consolidating all of your debts into a single loan with one monthly payment. You can do this by taking out a second mortgage or a home equity line of credit. Or, you might take out a personal debt consolidation loan from a bank or finance company.

## Are debt consolidation loans a good idea?

Some of these loans require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home. Most consolidation loans have costs. In addition to interest, you may have to pay “points,” with one point equal to one percent of the amount you borrow. It can be an expensive way to get money, so do some calculations to see if it’s worth it to you.

## What does filing for personal bankruptcy do?

People who file for personal bankruptcy get a discharge — a court order that says they don’t have to repay certain debts.

Bankruptcy is generally considered your last option because of its long-term negative impact on your credit . Bankruptcy information (both the date of your filing and the later date of discharge) stays on your credit report for 10 years . That can make it hard to get credit, buy a home, get life insurance, or get a job. Still, bankruptcy can offer a fresh start if you’re in financial trouble.

## What are the main types of personal bankruptcy?

The two main types of personal bankruptcy are Chapter 13 and Chapter 7. You must file for them in federal bankruptcy court. Filing fees are several hundred dollars, and attorney fees are extra. For more information, visit the United States Courts.

Both types of bankruptcy may discharge and get rid of unsecured debts like credit card or medical debt , and stop foreclosures, repossessions, garnishments , and utility shut-offs, as well as debt collection activities. They also give exemptions that let you keep certain assets, though how much is exempt depends on your state.

## What’s the difference between Chapter 13 and Chapter 7 bankruptcy?

Generally, Chapter 13 lets people with a steady income keep property, like a mortgaged house or a car, which they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that lets you pay off some of your debts in three to five years, rather than give up any property. After you make all the payments under the plan, the court discharges your debt so you don’t owe anything else.

Chapter 7 is known as straight bankruptcy. In general, Chapter 7 involves liquidating all of your assets that aren’t exempt. Exempt assets might include cars, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official, called a trustee, or turned over to your creditors.

## What debt won’t be erased by filing for personal bankruptcy?

Filing for personal bankruptcy usually won’t erase child support, alimony, fines, taxes, and most student loan obligations, unless you can prove undue hardship. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually doesn’t let you keep property when your creditor has a lien or financial interest in it.

## What do I need to do before I file for bankruptcy?

You have to get credit counseling from a government-approved organization up to six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved agencies at the U.S. Trustee Program , the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. You have to file a certificate with the bankruptcy court proving that you took the course.

Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test” where you confirm that your income doesn’t exceed a certain amount. The amount varies by state —learn more from the U.S. Trustee Program .

## What do I need to do after I file for bankruptcy?

You have to take a debtor education course from a government-approved organization about things like developing a budget, managing money, and using credit wisely. To find a counseling organization, check the list of approved debtor education providers . You have to file a certificate with the bankruptcy court proving that you took the course.

## After I pay off my debt, is there anything I can do about my credit?

No credit repair company can legally remove negative information from your credit report if that information is correct — so don’t believe anyone that tells you otherwise.

Only time can make accurate information go away. A credit bureau can report most accurate negative information for seven years and bankruptcy information for ten years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. The seven-year reporting period starts from the date the event took place. But there are steps you can take to repair your credit over time .

## What To Do If You Paid a Scammer

Scammers often ask you to pay in ways that make it tough to get your money back. No matter how you paid a scammer, the sooner you act, the better. Learn more about how to get your money back.

## Report Debt Relief Scams

Where do i report a debt relief scam.

If you have a problem with a debt settlement or other debt relief company, of if you see a scam, fraud, or bad business practice, report it

• to the FTC at ReportFraud.ftc.gov
• your  state attorney general
• your local consumer affairs office
• Search Search Please fill out this field.

## How to Get Out of Debt

1. understand your debt, 2. plan a repayment strategy, 3. understand your credit history, 4. make adjustments to debt, 5. increase payments, 6. reduce expenses, 7. consult a professional financial advisor, 8. negotiate with lenders, the bottom line.

• Credit & Debt
• Debt Management

## How to Get Out of Debt in 8 Steps

Katie Miller is a consumer financial services expert. She worked for almost two decades as an executive, leading multi-billion dollar mortgage, credit card, and savings portfolios with operations worldwide and a unique focus on the consumer. Her mortgage expertise was honed post-2008 crisis as she implemented the significant changes resulting from Dodd-Frank required regulations.

Holding too much debt can cause financial hardship in several ways. You may struggle to pay your bills, or your credit score could suffer making it more difficult to qualify for more loans like mortgages or auto loans.

If you're carrying a significant amount of debt, you can take several steps to get out of debt and on a healthy financial path.

## Key Takeaways

• High debt levels can lead to lower credit scores, which can make it more difficult to get financial products.
• Consider paying down your credit cards with the highest interest rates first or paying off your smallest debt first.
• Look for ways to reduce your expenses and put the money you save toward your debt.
• Student loan forgiveness programs and income-based repayment programs can help with student loans.

Debt can include mortgages, student loans, credit cards, and other types of personal debt. Carrying too much debt can be stressful. Getting out of debt can put you in better financial health and open more opportunities.

Review all your loan statements and bills and fully understand how much debt you owe each month as well as how much interest you are paying on the different debts.

Ensure that your monthly debt obligations and necessary expenses are below your income. If you cannot afford to pay your essential bills, you will need to take steps like negotiating with lenders or securing more income.

Instead of just putting extra money toward any of your debt, think about which debt you want to pay down first.

Targeting high-interest debt first using the avalanche method will save you the most money in the long-run. However, some people find tackling the smallest amount of debt first works better for them because it keeps them motivated.

Check your credit rating and review your credit report for inaccuracies. You can get from each of the three credit bureaus Experian, Equifax, and TransUnion or from Annualcreditreport.com . You are entitled to your credit report at least once per year.

Your credit report can help you understand how your debt is impacting your credit score. You can see if you have a significant number of late payments or if you have a high credit utilization ratio, meaning you use a high amount of the debt available to you.

If your credit rating allows for it, try to get a larger, lower-interest loan and  consolidate your debts  into this loan. This can speed up the process of paying off your debt by minimizing the interest.

You may  consider a balance transfer offer  of 0% interest from one of your credit cards. This way, you can get  grace period  from that could last anywhere from six to 18 months depending on the offer. Be aware that if you don't pay the balance off in full before the offer term ends, you will pay the credit card's interest rate on the balance.

If you own a home and have equity, you may be able to use a home-equity line of credit (HELOC) to pay off higher-interest debt. Lines of credit have significantly lower rates than credit cards.

Whenever possible, double the amount of payments you make to your debt, especially for high-interest debt. Paying more than the minimum can speed up the time it takes to get out of debt.

By increasing your payment amount, you will be increasing the overall rate at which your debt declines and reducing the total interest you pay.

Cutting back on unnecessary expenses is a key part of getting out of debt. Review your regular expenses and identify which are necessary, such as food, housing and utilities, and which are unnecessary, such as entertainment or clothing.

Reducing your unnecessary expenses can give you extra money to put toward getting out of debt.

Try to avoid closing your credit cards. Closing cards reduces the overall amount of credit available to you and increases your credit utilization ratio , both of which can hurt your credit score.

A credit counselor may also provide support when you meet with your creditors. However, be wary of credit specialists that charge high fees.

If you are still struggling to pay your debt with your income, you can take other measures. If you are behind on your payments, you can try debt sentiment . With this strategy, you negotiate with lenders to reduce the amount of debt you owe in exchange for agreeing to pay a portion of your balance.

One drawback to turning to debt settlement is that it can negatively affect your credit score for several years.

Investopedia / Ellen Lindner

## How Can You Get Out of Debt and Save Money?

You can get out of debt and save at the same time, but you must budget and plan. First, always pay the minimum requirement payments on your credit cards and loans. Then allot extra money toward paying down more debt and saving, according to your goals.

## How Can You Get Out of Real Estate Debt?

If your mortgage debt is too high, there are a few steps you can take to help lower it. First, you may be able to refinance your mortgage for a lower percentage rate, depending on market conditions and what you can get approved for. You can also make extra payments towards the principal on your mortgage loan, which will reduce the length of your loan and lower your interest costs.

## How Can You Get Out of Student Debt?

If you have multiple student loans, consider refinancing your loans into one payment with a lower interest rate. Research loan forgiveness programs if you have a federal student loan. It is difficult to include student debt in a bankruptcy filing.

If you can't get out of debt, you may have to declare bankruptcy , which can ruin your credit rating and make you ineligible for loans or credit for years. Consider all your options carefully and weigh their pros and cons. Consult a professional financial advisor for more specific guidance on the options for getting out of debt for your situation.

myFICO. " What Is a FICO Score? "

Consumer Financial Protection Bureau. " How to Understand Promotional Financing ."

Consumer Financial Protection Bureau. " What Are Debt Settlement Services? "

U.S. Department of Education. Federal Student Loans. " Student Loan Forgiveness Programs ."

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