How Can You Reduce Or Eliminate Your Debt?

There are multiple options for relieving your debt burden, and the choice you should make will depend upon your individual situation. Some options offer temporary relief for a short term financial setback, while others provide a reduction or elimination of your debt. 

Possible avenues for debt relief include:

Contacting your creditors yourself 

Most major creditors are willing to help their customers to weather a temporary financial difficulty. They can offer options such as payment deferments, which allow one or more payments to be skipped and paid at the end of a loan, or interest only payments, in which you pay only the monthly accrued interest.

Using these options will not reduce or eliminate any of your debt, but may allow you to handle a temporary financial setback with your credit score intact.

Debt relief services

These businesses negotiate with your creditors to reduce your debt. You make payments to the debt relief service company and they distribute the money among your creditors until they are paid a previously negotiated sum. 

The benefit of debt relief services is that they reduce your debt. However, your credit score is substantially affected, and you may still face legal proceedings and debt collection activities if you stop paying your creditors while your debt is being negotiated and you are paying the debt relief provider.  It could take several months before your debt reduction is finally resolved.


Bankruptcy results in the elimination of all debt except for those that are exempt from bankruptcy such as federally backed student loans.

There are two types of personal bankruptcy that are available, and the type you choose will mostly depend upon whether you intend to keep your home. The two types of bankruptcy are:

Chapter 13 bankruptcy

This type of bankruptcy involves a court ordered restructuring and reduction of debt. Your assets and liabilities are presented to a bankruptcy court and an affordable repayment plan is devised. This plan will typically last for three to five years, after which your debt will be completely paid.

Chapter 7 bankruptcy

This type of bankruptcy wipes out all debt obligations, but you will need to surrender assets to the court to be distributed among creditors, including your home. If you are in debt beyond any reasonable ability to repay, and have little or no equity in your home, this may be your only choice.

Bankruptcy remains on your credit reports for ten years and will result in difficulty in obtaining credit during that time. However, if you are at the point of filing for bankruptcy, your credit is probably already damaged. 

If you're ready to explore bankruptcy or other debt relief options, you may want to contact an experienced lawyer like Curtis A. Anderson, Attorney At Law