Bills Logo Debt Relief Guide

Jul 19, 2024
Editor’s Note
Advertising Disclosures

At, we strive to help you make financial decisions with confidence. While many of the products reviewed are from our Service Providers, including those with which we are affiliated and those that compensate us, our evaluations are never influenced by them.

Juggling your finances? You are not alone. According to the NY Federal Reserve data for Q4 2016, over 55% of consumers in the United States had credit card debt. Whether you are paddling upstream, holding your head over water, or slowing sinking, there are debt relief options to meet your personal situation. provides you with this debt guide to help you put your finances on the right course and get out of debt.

Get Out of Debt

Some people get into debt due to sloppy financial habits or just plain overspending; however, some people get into debt due to hardships such as a job loss, divorce, medical illness, or death of a beloved that could push anyone into debt: even someone who never had financial problems before.

Household debt is increasing: Mortgages, credit cards, student loans, auto loans, and personal loans are the main types of personal debt. According to the NY Federal Reserve, Aggregate household debt balances increased in the first quarter of 2018, for the fifteenth consecutive quarter, and are now $526 billion higher than the previous (2008:Q3) peak of $12.68 trillion. As of March 31, 2018, total household indebtedness was $13.21 trillion, a $63 billion (0.5 percent) increase from the fourth quarter of 2017. Overall household debt is now 18.5 percent above the 2013:Q2 trough." Total household debt in August 2017 already was higher than pre-recession levels. debt relief guide helps you analyze your financial situation, create a plan and find the best tools to get out of debt.

The guide is divided into these sections:

  • Know Your Finances

  • Set Up Your Debt Relief Strategy

  • Find Your Debt Relief Tactic

Step 1: Know Your Finances

The first thing that you need to do is complete a debt health check-up. If you want to take care of your debt problem, then you need to take the time to check your credit, your income, monthly spending, debt, and assets. Get out of Debt Checklist helps you: Review the periodic steps you need to take, Measure and review your vital financial health ratios, and Set your get out of debt goals.

The Checklist provides you with information and links to help you track your finances, including:

Credit Report: It is important to take out a credit report and review your loans, credit cards, and other debts. Check to see that all of the information is accurate and in the case of inaccurate negative information, dispute those items

Budget: The only way you are going to know if you can afford your monthly payments, or to restructure your debt, is to carefully analyze your monthly budget. Check out Budget Guide for more information.

Net Worth: Your ultimate goal is to get out of debt and build up your net worth. Your credit Report should help you take stock of all your major liabilities. Also, make a list of any other debt or major bills that you owe. Medical debt is a common source of debt. Also, take inventory of all your major assets including savings, investment accounts, retirement accounts, other liquid assets, and your home or other property.

Track Your Finances

In order to get out of debt you need to get a periodic snapshot of your financial situation. 

Make sure that you keep tabs of your credit, your budget (income and expenses), and your net worth.  Track your situation over time and take advantage of - Go to Tracking your Finances spreadsheet (and copy into Google Drive) or Download Excel File.

 Check Your Ratios

After you take inventory, keep track of a few of your important financial ratios. Just like you keep track of your weight, your blood pressure or other vital health measurement, keep track of your important debt ratios.  Use the Financial Ratio tracker with a Google Sheet to monitor your financial health and progress, or download an Excel File

 Set Debt Relief Goals

Next, consider which financial goals are important to you. Keep your goals realistic and divide them up by time importance.   Use Debt Relief Goals spreadsheet to track your goals over time or download the Debt Relief Goals Excel Sheet. Our guide includes some of the most important goals, which are not always mutually exclusive, including: Getting out of debt quickly, Getting out of debt cheaply, Avoiding financial stress, Maintain or create a good credit score, and Create an affordable monthly payment. Match your goals with your means. Once you learn about the different debt relief tactics, it will be easier to choose an option that fits your budget and finances and meets your goals.


Step 2: Get Out of Debt Tactics

Now that you have a good idea of your financial situation it is time to match your situation with the various debt relief options. offers extensive information about the various debt relief options. Here is a brief review of the major debt relief tactics:


Tactic: Optimize Payment

  • Description: Snowball or Avalanche Method. Throw extra money at your debt and payoff quicker. Either highest interest or lowest balance.
  • Your Personal Goals: Pay off debt quicker and cheaper.
  • Be Careful: Need a healthy financial situation with extra cash each month.



Tactic: 0% Balance

  • Description: Payoff credit card debt with a new card at a 0% (usually introductory period).
  • Your Personal Goals: Payoff debt quicker. Generally need a good credit score to qualify.
  • Be Careful: Teaser period: If you carry the balance past the introductory period, you may face high interest rates. Possibly high upfront fees.



Tactic: Cash-out Refinance or HELOC

  • Description: If you have built up equity in your home, then you can out a mortgage to pay off your debt. Mortgages are generally for a longer period at either fixed or variable interest rates.
  • Your Personal Goals: Lower monthly payments. Affordable payments lower financial stress.
  • Be Careful: You are transferring unsecured debt to secured debt and endangering your home. Mortgages can have high origination and third-party fees.


shutterstock 141772447

Tactic: Debt Consolidation Loan

  • Description: Personal unsecured loan at a fixed interest and fixed monthly payment for 2-5 years. Consolidates debt into one affordable monthly payment.
  • Your Personal Goals: Payoff debt quicker and lower price (although need a good to excellent credit score to get best rates). Maintain and build credit score.
  • Be Careful: Don’t pay off debt and then run up new credit card debt. Origination fees add to costs. Interest rates vary greatly based on credit and financial status.


shutterstock 331572086 copy

Tactic: Credit Counseling and Debt Management Plan (DMP)

  • Description: Budgeting and financial counseling, followed by a DMP that negotiates lower interest rates with your credit card companies. Simplifies your payments by creating one monthly consolidated payment. Lower monthly payment. Simply monthly bills payments. Moderate payment time.
  • Your Personal Goals: Lower monthly payments. Simplify payments, Minimize damage to credit.
  • Be Careful: Make sure you can stick to the plan. Can hurt credit score. In general, only credit card debt can be enrolled. Monthly fees.



Tactic: Debt Settlement

  • Description: Professional debt negotiation for unsecured debt. If you are in a financial hardship, then your debt can be reduced. You make monthly deposits into a designated account. Once you have built up funds the company negotiates settlements and uses your funds to pay off the debt and pay their fees.
  • Your Personal Goals: Lower monthly payments. Pay off debt cheaper.
  • Be Careful: Hurts credit score. Possible tax bill. Might still face collection calls and lawsuits. Avoid upfront fees.



Tactic: Bankruptcy

  • Description: A legal process to pay off your debts for those with a financial hardship. Either a Chapter 7 bankruptcy that wipes out debt, or Chapter 13 bankruptcy that pays off debt through a court approved monthly payment plan.
  • Your Personal Goals: Can potentially wipe out all or part of your debt. Can be very quick (Chapter 7) or a five-year period (Chapter 13). Stops collection processes.
  • Be Careful: Hard to qualify for a Chapter 7 bankruptcy. Many people don’t finish Chapter 13 bankruptcy.
shutterstock 240505024 copy

Get Debt Relief Help

  • Improve your financial situation: Most households have debt and many can improve their financial situation through one of the debt relief options.
  • DIY or Professional Help: Some can use a Do-It-Yourself approach. Others can greatly benefit by using professional help.
  • FInd a Reputable Company: When you look for help, make sure that you find a reputable debt relief company. Compare the pros and cons of all your options.


Confused on How to Get Out of Debt: Use Debt Navigator

Matching a debt relief program with your personal situation is confusing. No matter the size of debt you have, check out Debt Navigator to help you find the best debt relief solutions.


Step 3: Stick with your Debt Relief Plan

Congratulations on finishing the first steps. Now is the time to stick to your plan.

Many people take on a too ambitious program. Not finishing a program, running up new debt, and poor budgeting are all common problems. The Checklist provides you with information and links to help you track your finances, including:

Here are two key words of advice: Patience and Perseverance.

No matter which debt relief plan you choose, remember your overall goals. It isn’t a one-time effort. There may be ups and downs on your journey to getting out of debt. Take one step at a time. Good planning and group effort can help you get through tough times.