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    By ANDREW BEATTIE, Updated March 11, 2023

    Reviewed by KATIE MILLER

    Holding too much debt can cause financial hardship in several ways. You may struggle to pay your bills, or your credit score could suffer making it more difficult to qualify for more loans like mortgages or auto loans.

    If you're carrying a significant amount of debt, you can take several steps to get out of debt and on a healthy financial path.


    • High debt levels can lead to lower credit scores, which can make it more difficult to get financial products.

    • Consider paying down your credit cards with the highest interest rates first or paying off your smallest debt first

    • Look for ways to reduce your expenses and put the money you save toward your debt.

    • Student loan forgiveness programs and income-based repayment programs can help with student loans.

    • Consult with a professional credit counsellor about your options for your situation.

    • How to Get Out of Debt

    How to Get Out of Debt in 8 Steps

    Money comes in, money goes out. For many people this is about as deep as their understanding gets when it comes to personal finances. Rather than ignoring your finances and leaving them to chance, a bit of number crunching can help you evaluate your current financial health and determine how to reach your short- and long-term financial goals.

    1. Understand Your Debt

    Review all your loan statements and bills and fully understand how much debt you owe each month as well as how much interest you are paying on the different debts.

    Ensure that your monthly debt obligations and necessary expenses are below your income. If you cannot afford to pay your essential bills, you will need to take steps like negotiating with lenders or securing more income.

    2. Plan a Repayment Strategy

    Instead of just putting extra money toward any of your debt, think about which debt you want to pay down first.

    Targeting high-interest debt first using the avalanche method will save you the most money in the long-run. However, some people find tackling the smallest amount of debt first works better for them because it keeps them motivated.

    3. Understand Your Credit History

    Check your credit rating and review your credit report for inaccuracies. You can get from each of the three credit bureaus Experian, Equifax, and TransUnion or from You are entitled to your credit report at least once per year.

    Your credit report can help you understand how your debt is impacting your credit score. You can see if you have a significant number of late payments or if you have a high credit utilization ratio, meaning you use a high amount of the debt available to you.

    4. Make Adjustments to Debt

    If your credit rating allows for it, try to get a larger, lower-interest loan and consolidate your debts into this loan. This can speed up the process of paying off your debt by minimizing the interest.

    You may consider a balance transfer offer of 0% interest from one of your credit cards. This way, you can get grace period from that could last anywhere from six to 18 months depending on the offer. Be aware that if you don't pay the balance off in full before the offer term ends, you will pay the credit card's interest rate on the balance.

    Important: If you own a home and have equity, you may be able to use a home-equity line of credit (HELOC) to pay off higher-interest debt. Lines of credit have significantly lower rates than credit cards.

    5. Increase Payments

    Whenever possible, double the amount of payments you make to your debt, especially for high-interest debt. Paying more than the minimum can speed up the time it takes to get out of debt.

    By increasing your payment amount, you will be increasing the overall rate at which your debt declines and reducing the total interest you pay.

    6. Reduce Expenses

    Cutting back on unnecessary expenses is a key part of getting out of debt. Review your regular expenses and identify which are necessary, such as food, housing and utilities, and which are unnecessary, such as entertainment or clothing.

    Reducing your unnecessary expenses can give you extra money to put toward getting out of debt.

    Important: Try to avoid closing your credit cards. Closing cards reduces the overall amount of credit available to you and increases your credit utilization ratio, both of which can hurt your credit score.

    7. Consult a Professional Financial Advisor

    Meeting with a credit counselor or financial advisor can help you understand all your options for getting out of debt. Professional advisors can guide you through the best strategies for your particular situation.

    A credit counselor may also provide support when you meet with your creditors. However, be wary of credit specialists that charge high fees.

    8. Negotiate with Lenders

    If you are still struggling to pay your debt with your income, you can take other measures. If you are behind on your payments, you can try debt sentiment. With this strategy, you negotiate with lenders to reduce the amount of debt you owe in exchange for agreeing to pay a portion of your balance.

    One drawback to turning to debt settlement is that it can negatively affect your credit score for several years.


    How Can You Get Out of Debt and Save Money?

    You can get out of debt and save at the same time, but you must budget and plan. First, always pay the minimum requirement payments on your credit cards and loans. Then allot extra money toward paying down more debt and saving, according to your goals.

    How Can You Get Out of Real Estate Debt?

    If your mortgage debt is too high, there are a few steps you can take to help lower it. First, you may be able to refinance your mortgage for a lower percentage rate, depending on market conditions and what you can get approved for. You can also make extra payments towards the principal on your mortgage loan, which will reduce the length of your loan and lower your interest costs.

    How Can You Get Out of Student Debt?

    If you have multiple student loans, consider refinancing your loans into one payment with a lower interest rate. Research loan forgiveness programs if you have a federal student loan. It is difficult to include student debt in a bankruptcy filing.

    The Bottom Line

    If you can't get out of debt, you may have to declare bankruptcy, which can ruin your credit rating and make you ineligible for loans or credit for years. Consider all your options carefully and weigh their pros and cons. Consult a professional financial advisor for more specific guidance on the options for getting out of debt for your situation.

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