Advice for Managing Debt

Too many bills causing you stress? Find the right way to get out debt.
  • Know what you can afford.
  • Use bill pay to avoid late fees.
  • Don't just pay the minimum.
  • Stop using high interest rate credit cards.
  • Use your savings.
  • If you cannot pay down on your own, seek advice and help.
See your options for paying off debt

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Advice and Strategies to Get Out of Debt

Advice for managing debt falls primarily into two main buckets:

  1. Self-managed debt pay-down and optimization; and
  2. Debt help and advice from debt solution providers.

We’ll try to get you started down the path on both debt fronts and then point you in the right direction to help you solve all of your debt troubles, no matter where you stand today and what your goals are, with the help of our debt resources that are easy to use and can help you solve your debt concerns, including: Debt ArticlesDebt Guides — Debt CalculatorsDebt QuestionsBudgetVideos on Debt Advice — Debt Relief Boot Camp — and a matching service to get free Debt Quotes.

Self-Managed Debt Pay-down Tips

At the end of the day, paying down debt is about cash flow. You need more income coming in than you have expenses going out and then you must use all of that freely available cash flow to pay down your debts. This sounds simple, but sometimes the most basic advice is the hardest to live by, and starts with the “B” word: Budget! As a part of any good and strong budget you need to know what you can afford, pay your bills on time (use online bill-pay to avoid late fees and help manage payments), do not just pay the minimum but pay as much as you can each month, stop using high-interest rate credit cards and even look to lower your rates by negotiating with your lenders, and in many cases you can use your savings to pay down high interest debt. We would recommend the debt avalanche approach, where you pay as much as you can towards your highest interest rate debts first and then roll all of the free cash available to the next highest interest cost account as each gets paid down.

Debt Advice From Solution Providers

There are several primary forms of debt relief to help someone deal with debt problems. Bills.com has created dedicated content and mini-portals on each of these main debt solutions, including:

We have also created an industry-leading debt white paper that compares debt settlement and credit counseling across a variety of factors such as the actual cost, monthly payments, time to debt freedom and success rates of the main debt relief options.

Quick Debt Advice

Our quick advice goes something like this — if you have a home with over 20% of the value in equity, you should refinance your mortgage and consolidate debts with a new mortgage. If you cannot refinance, but can afford to pay more than 4% a month in monthly payments, then explore rolling up your debts by paying as much as possible to the account with the highest interest rate first and then snowball up your debts until they are paid off. If you cannot afford your monthly payments, then explore debt settlement (where you resolve your debts for less than you owe and get debt free in a short amount of time, but sacrifice your credit rating) or credit counseling (where you pay slightly lower interest rates and lower your monthly payments). Lastly, if you cannot afford to pay even 1.5% of your outstanding balance each month, then seek counsel from a bankruptcy attorney.

12 Comments
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  • JH
    Jessica,
    Jan, 2012
    I have a question about a judgement. It is scheduled to come off my credit report at the end of this year. I have the money that I could pay this off now, but I know if I pay it off it will remain on my credit 7 more years. I live in VA. What should I do? Will the judgement just expire? Will I always owe this debt even though it won't be on my credit report anymore?
    • BA
      Bill,
      Jan, 2012
      Paying a debt does not restart the FCRA 7-year clock. The clock starts at the date of first delinquency, and not the date of last activity. Some unscrupulous collection agents re-age debt in an attempt to put pressure on debtors, but that is a violation of the FCRA. See the Bills.com resource Judgment Appearing On Credit Report to learn more about judgments and credit reports.

      In Virginia, the length of a judgment is 8 years, but it may be renewed. If it is not renewed, the judgment-creditor may not attempt to collect on the debt using wage garnishment, account levies, or liens on your property.
  • CF
    Camille,
    Moreno Valley, CA,
    Jun, 2011
    I am currently looking for employment. I need some advise in regards to my car. I got in an accedent about a year ago and still have been making payments on it without driving it because it needs a lot of work done on it. I only had liable coverage on it. No one or my self got hurt. It is a 2005 Reno Suzuki. I owe about 5,901.86 on it and it's maturity date is 8/06/13. I was wondering would it be wise to buy another car that would cost $1,000 and payoff the current damaged one or fix it for 1,500 and still pay? I would realy appreciate some feed back. Thank you.
    • BA
      Bill,
      Jun, 2011
      Without knowing more about your situation, it is difficult for me to answer your question. In general, a $1,000 car is going to be a maintenance headache, and will cost you money to insure, too. If you have $1,000 to spend on a second car, keep saving and use the money to fix the 2005 vehicle.
  • NB
    Nan,
    Forest Grove, OR,
    Apr, 2011
    I live in the state of Oregon, and in July 2006 I separated from my husband. In January of 2007 we began divorce proceedings and it was settled and final in August of 2007. Sometime in 2007 (I think around April/May) he started using a credit card that I believed to not exist any longer as we had signed a preliminary agreement that we would not use any joint credit and he was going to refinance our home to pay off any current joint debt and close those accounts. Sometime late in 2008, I began receiving phone calls about some late payments for a Discover Card. I told them I didn't have a Discover card and didn't know what they were talking about. Apparently, we had an old Discover card account back from 10 years prior that I didn't realize even existed any more. Now to make a long story short, they are trying to come after me for the balance (upwards of $6000 now). What are my rights?
    • BA
      Bill,
      Apr, 2011
      Consult with your divorce lawyer. You almost certainly have cause of action against your ex-spouse to collect any damages he caused by defaulting on payments for a joint account you thought was closed.
  • PO
    pam,
    Butler, PA,
    Mar, 2011
    My husband abd I have bin stuggling with trying to get r debt under controll but it seems like we can't. All of are credit cards are "charged off" but I have an gas bill for over 1,000$ I have alreay bin taken to court over a credit card in 2010. My husband has 2 repos(car n motrcycle) and a forclouse of a house on his report from an old marriage. What do u think r best opptions are. We are already going from paycheck to paycheck on every day living. We live in PA and I just want to no what is best.
    • BA
      Bill,
      Mar, 2011
      I have three questions for you and several observations:
      1. Do you have a household budget?
      2. If not, why? No one can help you if you and your spouse cannot agree to a household budget. If you cannot agree to a budget then you will continue on this path of foreclosures, repossessions, credit card charge-offs, and an inability to pay your basic utilities.
      3. If you have a household budget, how closely do you adhere to it? Again, if one or both spouses ignore a budget the family's finances are doomed.

      Join a local group that focuses on personal finance. I have a family member who joined one at her church recently. She said being with others who wrestle with personal finance issues is helpful because, 1) she gains knowledge about saving and spending, and 2) she socializes with others sharing that interest. You can and will work your way out of this.

      Consult with a lawyer in your state who has experience with bankruptcy so that you can put the deficiency balances on the foreclosure and repos behind you, as well as the credit card debt.

  • AH
    angela,
    B/o Pottstown, PA,
    Mar, 2011
    Hello, I filed for Chapter 7 bankruptcy in 2010, it was closed because the court didn't get my educator certificate, which I had. I was planning on sending the $260 to reopen the case and mail the certificate to the court. Before I had the chance to do that however, a collection agency that bought a debt from Beneficial had a judgment against me and they put an $18,000.00 freeze on my checking account in the beginning of February. I was so upset and scared. I didn't know what to do, and I didn't have money for an attorney. So, I signed a contract under duress that I would pay them $200/month until the debt is paid off. After I had $1,000 sucked out of my account from attorney fees for the company and a ton of bounced check fees that tried to clear when my account was frozen, I decided to get that Chapter 7 reopened. The judge reopened the case and I sent my educator certificate and I am now discharged on my Chapter 7. Since the collection agency bought a debt that was discharged in the bankruptcy, and now the bankruptcy is discharged, am I obligated to pay anymore money to this company? They have my account information and are going to take $200/month out of my account on the 15th of every month. I want to know if I should go to the bank with my discharge notice and if I should explain the situation with the manager and have that withdrawal stopped from coming out of my account, or if I should close out the account all together? Please advise. Thank You, Angela
    • BA
      Bill,
      Mar, 2011
      Consult with your bankruptcy lawyer about this question. I have only the facts you wrote here, which are insufficient for me to give you a precise answer to your specific question. My guess — note that word choice — is that any debt included in the bankruptcy discharge is just that — discharged, canceled, wiped out. If what you wrote here and what I infer is correct, the creditor should cease the withdrawals the moment the discharged is signed by the judge.
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