Getting Out Of Debt: A Guide

Debt is a unique challenge. It seems like the more you do, the less impact you make, and it quickly becomes a source of stress and anxiety that compounds. It may seem impossible to get out of debt as interest payments stack up higher and higher, but like every journey, it begins with a single small action.

By taking consistent action to track and manage your debt coupled with some of the steps we outline in this guide, you may be able to finally make your credit work for you instead of working to pay off your debts.

Part 1: Understanding Your Credit Obligations

Make a list of everything that you are obligated to pay immediately as well as long term.

Like any journey, you need a road map to understand where you are, where you’ve been, and where you are going. Too many credit users have no real idea of what their overall financial situation is, and even fewer track their debts beyond what they think they need to pay monthly and what they owe overall.

Anything that you owe from marital separation payments to mortgages to your car payment all play an important part in how they affect your credit as well as how you are able to use your cash flow every week.

Other things that can factor in include any fines that you owe from judgements, taxes, shopping credit, and more.

It’s important to know where your money is going and to whom. Your list should include the total amount owed to which lender or source as well as other key details that include:

  1. When the start date of the contract is
  2. How much you need to pay them on each payment date
  3. What your interest rate is
  4. What the grace period date is
  5. What you’ve currently paid and what you still need to pay

If it seems like a lot to keep track of, it should, because trying to track it all without the right tools will make it hard for you to pay it back in a timely manner. And if you value your credit and want the opportunity to be able to refinance or be lended to again in the future, you need to make every payment on time. Even just one missed payment can lead to a drop in your overall credit score.

In the interest of making things simpler for you, we decided to create a simple tracking document that you can use for no cost at all.

Approx Time Needed: 1 hour

Price: Free

Additional Help:

A recommendation: If you’ve missed payments but aren’t sure exactly how bad the situation is, it’s best for you to mark down exactly how many you’ve missed, when, and the total amount. If you can’t catch up and it’s already moved to collections or “written-off” as the industry calls it, find out and write down when you initially missed a payment and were formally marked.

Part 2: Making The Most Of Your Budget (Or How To Make One)

Are you spending more than you are making?

If you aren’t aware of how much you are spending, it’s easy to feel overwhelmed and lose track of when certain bills are due. The biggest step you can take to getting out of debt is to sit down and write it all out.

Most people lose a significant amount of their income from spending on small non-necessities that add up quickly. You need to get a full financial overview of how much money you have coming in and from what sources and on what dates each month.

You then need to double-check what you spend your money on including your recurring bills and other expenses. Only by finding the best way to curtail your spending can you use the surplus to get on a payment schedule (also known as a payment plan) or potentially settle with your lender in the event you can’t make the full payment as expected.

The requirements:

  • 3-6 months (or as many) statements from your checking and savings accounts
  • 3-6 months worth of pay stubs or other documentation that shows what you’re earning
  • 3-6 months of your utilities, rent, and other bills

Time required: 1.5-4 hrs total

Time required to re-examine a budget you already have: Up to 1 hr.

Price: Dependent on which platforms, software, or apps you rely on.

Part 3: Get To Know Your Credit

Know your debts, know ALL of your credit scores

Credit scores are not as straightforward as they seem. Though the higher a number is, the better it is, understanding why it is what it is can be dependent on much more than initially meets the eye.

Factors that contribute to your credit score include your overall debts, when they were opened, how they are paid, and the types of credit you have.

The first step to knowing your debts and credit scores is to request a credit report from any number of sources. The easiest way is to request a free credit report from Currently, you can request it for free at any time due to the ongoing pandemic wreaking havoc financially, but normally you can get it annually for free.

The other options include credit reporting apps like Credit Karma or any other credit monitoring tool, though it’s best to check using a couple to ensure there is consistency if you aren’t relying on

Your credit report is the most comprehensive way to see the what, when, and who behind what your debts actually are and help fill in any blanks that you may have missed earlier. If your credit is in good shape, then you’ll have more tools at your disposal for getting out of debt than if it’s bad.

Important Info: One section is dedicated to notifications for things you may not even be aware of, it’s called public records. This is where certain things you owe may be listed such as legal debts may be listed due to court rulings.

Required Time: Up to 1hr

Price: None

Important Link:

Total time to check your credit: 20 mins.

Part 4: The Five Strategies For Escaping Debt

There is a way to get out of debt for everyone

Regardless of your debt situation, there are a few options for solving your debt problems.

  1. Clear the debt by paying it
  2. Provide proof that you are not responsible for it
  3. Get help by getting your debt forgiven
  4. File for bankruptcy
  5. Wait until the statute of limitations is over

No two debt situations are the same. Often, it will require a combination of the strategies provided above and often at different times to fully get out of debt depending on the size of your debts.

Price: None

Total Planning Time: Up to 4 hours

If you are feeling overwhelmed and need someone to help you make a plan, contact a debt expert that’ll provide you with an initial examination for free.

Strategy #1: Pay the entirety of what you owe (the smart way)

This is the most straightforward approach but it still has a few small details you may want to consider. The way it works is, you progressively make payments on the debts as required. But, you increase the frequency of your payments to try and offset the interest rate, which stops it from scaling as quickly or you try and find an opportunity to alter the amount you pay due to the interest rate via finding a new loan to consolidate your debt or to refinance.

Consolidating your debt means that you brought multiple debts into one place all for one monthly payment often at a lower interest rate, making it easier for you to pay off one big loan rather than multiple different payments at the same time.

Refinancing just means getting different terms and a better interest rate for one primary debt.

Some Extra Help:

  • All you need to know to get better interest rates for your credit cards
  • How to consolidate debt
  • Find the best plan for repaying student loans for you

Strategy #2: Get Evidence You Aren’t Responsible For The Debt

As incredible as it may seem, often debtors aren’t the most careful bunch when it comes to ensuring all of the details of their collections and debts are accurate. This presents a particularly great opportunity to remove debts from your credit report that are not yours. Sometimes, credit reports list debts that actually belong to other people, and a simple dispute may be enough to ensure they remove them.

Another reason that you may not actually be responsible for debt is because a spouse racked up debt without your knowledge. This could be because you file jointly with them and the taxes that were unpaid may be your responsibility due to the connection.

Extra Help:

  • All you need to know regarding the IRS Innocent Spouse Relief program
  • The best method for crafting a solid cease and desist document

Strategy 3: Get Your Debt Forgiven

There are a specific subset of debts that can receive special forgiveness if you undergo the correct process. For most of the options, it’s based on income, the debt, as well as what you decide to do in terms of service to the public.

Debt forgiveness can also be used as a moniker for settling a debt. Settling a debt means to get in contact with your creditors and offer them a lump sum of money in exchange for your debt being forgiven and no further payment required. It’s one system for getting the phone to stop ringing and the stain on your credit report to have less impact.

Debt settlements are good ways to resolve debts if you have less money than you need but still want to simplify things without it possibly resurfacing.

Negotiating debt settlements is a tricky business. Certain companies such as Capital One offer programs that are meant to bridge the gap by offering a reasonable settlement repayment plan or method. Other companies have to be carefully negotiated with on your terms to get it in writing that after payment you will receive a settlement on your credit report.


  • How to get your student loan debt forgiven
  • Can your credit card debt be forgiven?

Strategy #4: As A Last Resort, Declare Bankruptcy

Bankruptcy can do a lot of damage to your credit, but only temporarily. If your debt is discharged by a court, you have two options depending on your situation. First, there is Chapter 7, which means you have a penalty that is on your report for ten years. It can take as little as a few months up to six months to get it processed. This is an issue if you may need to use your credit for any purpose, as it means you won’t have access to any emergency funds if you need some for whatever reason.

The second option is Chapter 13 bankruptcy which can take as long as five years to get, but the damage only is present on your report for less than 8 years.

Important Info: Almost any kind of debt can be removed due to being bankrupt, but the issue is that you must show for certain kinds of debts that you need them removed, or else you would continue to struggle financially even if other debts were removed.


  • All The Info On Chapter 13 Bankruptcy
  • What You Need To Know About Chapter 7

Strategy #5: Using Statute Of Limitations Expiration To Clear Debt

If there is one thing to be thankful for, it’s that most debts aren’t forever. There is a legal way to make any debt disappear, and that method is time. Most debts have a legal time limit on when they can be collected. Most debt collectors have about seven to ten years to collect a debt, and if they pass the statute of limitations on that debt within whatever state the debt was incurred, you can tell them to leave you alone.

This doesn’t only matter when it comes to certain types of debts like missed rent payments or credit cards, it also includes tax, medical, and other types of debt.

Important Info: If you confirm that a debt exists whilst talking to a debt collector, and they are recording the call, they can use that confirmation to restart the clock on the statute of limitations timeline.


  • What is a statute of limitations and how can it help me with my debt?
  • Can the IRS garnish my wages forever?

Part 4: Making The Debt Go Away

It’s time to make your game plan. Choosing which strategy you go with can make or break your overall plan and can delay your debt freedom by small or significant amounts of time. The best way to make sure you make the best use of whichever combo of debt strategies you choose is to ask the right questions to find the right info.

  • How many collections do you have currently? How many can you pay off all at once?
  • Which debts can you consolidate and save money on?
  • What’s the maximum amount you can put towards your debts each month in the foreseeable future?
  • Can your debts be paid off within a timely manner? If not, could you pay it all of successfully within five years? Would it be better to declare bankruptcy?
  • What’s the maximum amount you could offer each debt to settle?
  • Is there any information on your credit report that is inaccurate?
  • How long is remaining on the total time for your debts before the statute of limitations expires?

Anytime you intend to choose consolidation as a tool for fixing some of your debts, always pursue it as an option before you choose to settle a debt as it can harm your credit score in a way that stops your ability to consolidate.

IMPORTANT INFO: Make a list of which strategies you may use and in which order. Some strategies may make others not an option once used, so choose carefully.

Price: Free

Total time required: 2-3 hrs.

If you need to talk to a debt expert, [company/site] may have the answers you need, just click here.

Part 5: Do The Work, Implement The Debt Strategies

Every debt escape option takes time and has a unique cost. Consolidation loans can take as little as five to seven days. Settlements can take a month to take effect and a couple of hours to negotiate. Programs for managing debt can take only a bit of setup time but a month to take effect.

Each choice you make should balance what each costs you in time, money, and effort, but also what impact it will have on your credit immediately and within the short to medium term.

Important info: When choosing loans to help fix your debts, choose ones with realistic payment policies. Don’t use loans that have fees for paying early. Also, if you have debts that are medical, contact the original debt holder, they may have a range of opportunities to help rectify the situation from repayment plans to forbearance.

Price: It can depend based on a myriad of factors.

OptionTotal TimePrice
Refinancing A Student Loan30 minutes to 2 hrs to apply and a week for approval1% of the loan to be financed
Transfer Balance2 hours to sign up maximum and up to a week to get your cardNone initially
Debt Management ProgramA month for approval and an hour or less discussionDependent on the state, maximum limit is below $80
Debt Settlement ProgramTakes between a year and a half and two years.Between 1% and 6% of the loan
Fed Student Loan Repayment PlanTwo weeks for approval and a few hours to applyNo charge
IRS Installment AgreementAn hour to apply and a month for approval$52 for direct deposit and $120 for payroll
Tax SettlementA few hours for applying and up to two months for approval$186 application fee
Consolidation LoansA couple hours to apply and a week to receive approvalA fee of about 1-3% of the loan

Part 7: Adding Income To Pay Your Debts Quicker

As soon as you find some sense of stability in your journey to ridding yourself of debt, adding income can expand your debt repayment plan greatly. More money means you can employ a greater variety of strategies. More money at your disposal means that you can pay more often, in larger amounts as well as make more offers for settlements when needed.

A few ways to add income include:

  1. Negotiating for a change in your rates whether with clients or at work.
  2. Taking on additional work for more pay via side projects or freelancer jobs found online or offline.
  3. Alter your mode of transportation going to and from work and other activities
  4. Limit your more expensive habits and tastes, consider eating in more and eating out less.
  5. Flip things you want to get other things you want with no extra cost.

Extra Help:

Part 8: Stay On Your Path Or Fall Deeper Into Debt

As you begin to make healthier choices when working on your debt, it becomes easier to stay on the path. However, there are a few things you can do to ensure you don’t harm your progress:

  • No matter how good your credit gets, don’t sporadically borrow once you can.
  • Think through all major purchases, especially if they would affect your credit.
  • Watch how your collections can happen, don’t let any catch you by surprise.
  • Limit your inquiries as those can be very valuable if you want any hope of emergency credit.
  • Use cash only when you go out if you have a propensity to spend without consideration
  • Put aside extra money in the event of an emergency.