We get it. Dealing with debt isn’t easy, especially if this is the first time you’ve faced these kinds of challenges. Most people have never heard of relief options, like consolidation, income-driven repayment plans, and installment agreements until they need them. That makes for a steep learning curve right when you need fast, decisive action.
Luckily, you’ve come to the right place. We created this quick-start guide to help you take control quickly by taking the right steps to get started. Debt.com knows debt. Now you can, too.
Need help now? Get a free evaluation to find the right options for relief without delay.
A quick-start guide to getting out of debt
Step 1: Take stock of where you are
You don’t always pay close attention to your balances and budget when you’re just trying to stay afloat. But you need to know where you stand, so you can map out a good strategy to become debt-free.
Know your debt
Start with the basics. Use this worksheet to write down the current balance, APR and status of each debt you owe.
Know your budget
You also need to review your budget to see how much cash flow you have to help you achieve your goal. If you don’t have a budget yet, use our free budget guide to find tools that make budgeting easy.
Know your credit.
Finally, you’ll need to know where your credit stands. You can find a range of free and paid tools for checking your credit in our credit monitoring guide.
Step 2: Prioritize, divide and conquer
Now that you know where you stand, you can start to plan.
Consider consolidation if you have good credit
If you have good or excellent credit, start by looking at consolidation loans. You take out a new loan to pay off all your existing balances. You can consolidate most types of unsecured debt, including:
- Credit cards, gas cards, and store cards
- IRS and state back taxes
- Child support arrears
Some lenders also allow you to roll in student loans. This will help you simplify your financial life by combining all your bills into one payment. With good or excellent credit, you can get the lowest interest rate possible, so you can get relief as quickly as possible.
What to do if you really can’t afford your payments
If you’re struggling to make ends meet, then you may need to explore solutions that can help lower your payments. Once you get into professionally-supported solutions, you usually have to deal with different types of debt separately.
- Debt management plans and settlement programs help with credit cards
- Federal repayment plans, loan forgiveness, and private settlement work student loans
- The IRS fresh start imitative can help you with back taxes
You should also consider bankruptcy. Most people do everything they can to avoid fling, but in truth, bankruptcy can be a good way to turn a corner with your financial situation.
Step 3: Talk to the right professionals
Once you understand your options, you can start contacting the right people to get the help you need.
Most financial services start with a free evaluation to make sure you’re a good fit to use that solution. This also gives you a chance to ask questions and get a feel for each company.
This part is easy. Debt.com can connect you with a full range of accredited relief services. So, with just one phone call, you can get in touch with all the professionals you need.
Ready to get started? Connect with all the services you need.
How much do you really know about debt?
The more you know about debt, the easier it is to manage it. The second part of this guide is designed to help you see how much you know, so you can start building a solid knowledge base to work from. So, let’s see how much you know…
What is debt?
Debt is generally defined as something owed to another. It’s money owed that you are responsible for repaying.
When a person wants to purchase goods or services but doesn’t have the money right then, they borrow it from a bank or lending institution and agree to pay that money back within a fixed or flexible period of time.
Because someone is lending you the money, you are usually obligated to pay that money back with interest and fees added. That’s how lenders turn a profit.
Different types of credit generate different types of debt
There are several key factors that distinguish different types of credit:
- Installment versus revolving
- Secured versus unsecured
The types of credit you use plays a big role in how easy (or hard) it is to manage your debt.
Good debt versus bad debt
Another important distinction is whether a debt is good or bad. It may seem like all debt is bad debt when it’s giving you trouble. However, certain types are good for your credit and your ability to move forward in life.
Article last modified on October 5, 2020. Published by Debt.com, LLC