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Daniel Cohen
UpdatedJun 20, 2024
Key Takeaways:
  • Contact your creditors if you are about to miss a payment.
  • Review all of your debt relief options.
  • Consider the pros and cons of each option you examine.

I am about to fall behind on my bills, what do I do? Is there a way to lower my payment

I have been out of work for about two years, working on and off during that time. Now I have found a permanent job, however with a major pay cut(well I should not say pay cut, I had NO income) . While out of work for that period of time, we have used up all the savings, and recourses. We are working with the "Making Home affordable" program to try and keep our house. So Can anyone recommend how to contact my creditors and see if they can work with me on lowering my payments to keep things in order? It's obvious that we cannot make the payments that we had in the past, and we still have two children to raise. ANY and ALL advice will be greatly appreciated. Thanks

I understand your desire to get a plan of action in place to help you handle your debt load. I have a few suggestions for you.

Contact Your Creditors

You asked for a recommendation for the best way to contact your creditors in order to get some payment relief. I am aware of no better way than simply calling each creditor’s customer service department. Ask about any hardship programs they have. Explain that you are under great financial distress, are in danger of losing your home, and need some flexibility from your creditors. Each creditor may have its own rules for qualifying for a hardship program or for how long any hardship program lasts. You may find creditors willing to lower your interest rate and/or minimum monthly payment for a few months or you may find that your creditors offer you no sympathy or flexibility. If you don’t get the answer you seek, ask the customer service representative to connect you with a supervisor.

Make a Budget

You did not specify how much debt you have, how the balances break down amongst your various creditors, or what interest rate you pay now. You also did not provide any information about your household income and expenses. You may not have thoroughly examined your finances. Do you track how you spend your money? Do you set any financial goals? A good first step is for you to work on making a budget. Without knowing more about your finances, it is impossible for me to recommend a specific course of action, so I will make some general observations.

Outside Assistance

The best solution to your financial problems could be for you to get the help of a debt management program to assist you in resolving your debts. I will examine three available solutions and how they may affect you.

Debt Settlement

You stated that you need to lower your monthly payments in order to hold things together. Debt settlement will lower your monthly payment. In a debt settlement program, rather than making monthly payments to your creditors, the settlement firm negotiates lump sum settlements with your creditors, frequently reducing your debts by 50% to 60% of your principal balances. These programs usually take about 3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. As I mentioned, a debt settlement firm should set you up with a low monthly program payment. However, it is important to keep in mind that payments in a settlement program are not being sent to your creditors. Your payments go into a special savings account, in lieu of making minimum monthly payments. There is one major drawback to debt settlement programs - they will significantly damage your credit while in the program and for at least a few years afterwards. You will also be exposed to your creditor's collection efforts, including letters calls and possible lawsuits. However, if you are currently unable to afford to pay your creditors, the hit to your credit and the negatives may be worth the benefit of ridding yourself of credit card debt.

The debt settlement industry is now required to follow a set of new rules issued by the Federal Trade Commission that went into effect in October, 2010. These rules were created to protect the consumer. For instance, anyone now enrolling in a debt settlement program is not required to pay a service fee to the settlement firm until his or her account has been settled. This makes settlement an even more attractive option for the consumer.

Credit Counseling

Another option to consider is a Consumer Credit Counseling Service, or CCCS. CCCS companies offer numerous services, such as financial counseling and budget planning. A CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. While your payment in a CCCS is very likely to be lower than your standard monthly minimum payments to your creditors, your payment in a CCCS program will be higher than in a debt settlement program.

There are several drawbacks to CCCS, though. First, depending on your creditors, the CCCS program may not be able to reduce your monthly payments enough to improve your financial situation. Second, it has a negative impact on your ability to obtain a loan, so you may not wish to enter into a CCCS, if you anticipate any large purchases, such as home or an auto, in the near future. Third, the average CCCS program takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.


Bankruptcy may be the best solution to your debt problems, but is a very different form of debt help. A Chapter 7 bankruptcy is a liquidation of assets and liabilities. Filing for bankruptcy is usually considered a last resort. Since bankruptcy reform went into effect a few years ago, it is much harder to qualify for Chapter 7 bankruptcy, and many families are forced to file for Chapter 13 bankruptcy, in which you repay a portion of your debts over an approximate five year period. Bankruptcy will stay on your credit report for five years and is a public record. If you are considering bankruptcy, you should always meet with a qualified bankruptcy attorney in your area.


There are many forms of debt resolution. People with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement. However, each consumer is different, so find the debt consolidation option that fits for you.

Lastly, here are some fast tips:

  1. If you have perfect credit and have equity in your home -- consider a Mortgage Refinance.
  2. If you can afford a healthy monthly payment (about 3 percent of your total debt each month) and you want to protect yourself from collection and from going delinquent -- consider Credit Counseling.
  3. If you want the lowest monthly payment and want to get debt free for a low cost and short amount of time, AND you are willing to deal with adverse credit impacts and collections -- then evaluate Debt Settlement.
  4. If you cannot afford anything in a monthly payment (less than 1.5 percent of your total debt each month) -- consider Bankruptcy, to see if Chapter 7 might be right for you.

Based on your expressed desire to have the lowest monthly costs, I suggest that you look most closely at debt settlement. makes it easy for you to apply for debt relief with pre-screened debt relief providers. If you want to see a very innovative side-by-side comparison, including a chart comparing payments, cost, time and success metrics then check out our recently published Debt Options Whitepaper.

Debt statistics

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q1 2024 was $17.69 trillion. Housing debt totaled $12.82 trillion and non-housing debt was $4.88 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in Hawaii, 16% have any kind of debt in collections and the median debt in collections is $1866. Medical debt is common and 5% have that in collections. The median medical debt in collections is $339.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.