People Facing Debt Have Many Options

Melinda Opperman

Mature middle-aged couple family wife and husband counting funds, savings declarations, investments,paperwork, financial documents, bankruptcy, court case, bills, pension with laptop.When people are struggling with their debts, they have a lot more options than they might realize. There are professionals, non-profit organizations, and free online resources available to help no matter how one’s personal finances look.


The first step is to assess your finances and create a budget. There are free courses available online to learn the right budgeting techniques for each consumer.

It’s often possible to course correct before one’s financial situation becomes too dire. This kind of “self-help” step is a good place to start.

Talk to Creditors

If debt repayment is a problem, people shouldn’t avoid talking to their creditors. By being proactive and reaching out, it’s likely there will be a more favorable workout. Creditors may have their own internal debt repayment plans, or may offer to skip a payment for a customer without reporting it to their credit reports.

Some creditors will refer their customers who are facing difficulty to a trusted counseling agency.


Nonprofit consumer credit counseling is available to help people create a budget and explore all of their options.

This is a good place to start for borrowers who need third party assistance. A certified credit counselor can help a borrower decide if budgeting alone is enough to resolve their situation, or if they need to look into bankruptcy or a debt repayment plan. A HUD-approved housing counselor can also explore options to help avoid mortgage foreclosure or rental eviction.

Approved credit counseling agencies also provide the legally required counseling and debtor education for those seeking bankruptcy.

Debt Management Plan

For borrowers who need it, credit counseling services can establish debt repayment plans with their creditors.

Creditors offer concessions in the form of lower fees and interest charges to people who go this route. The borrowers’ payments are also consolidated, so the borrower only makes one monthly payment to the counseling agency. The agency then distributes payments to all of the creditors.

Debt Settlement

Sometimes a creditor will accept a settlement offer, where the borrower repays a percentage of the amount owed and the debt satisfied. Debt settlement is typically a process that allows you to pay off debt by paying a single lump sum that is lower than the total amount you owe.

Debt settlement typically has a negative impact on your credit score, however settling a debt may be considered better than not paying it at all.

Settlements are achieved through negotiation between lenders and consumers or a third-party-debt settlement company.


In most extreme cases, a consumer’s debts are discharged through a bankruptcy filing. It’s critical to have a qualified attorney represent the debtor in this kind of case.

Bankruptcy may involve liquidating some assets, but chapter 13 bankruptcy plans may help people avoid surrendering property.

Which of these options is best for a given consumer is an individual decision; no two consumers’ situations are the same. Getting professional help or counseling is the best way to figure out which of the many options available is the best way forward for a particular borrower.

A public education project of the National Association of Chapter Thirteen Trustees

© 2021 BFINE

The materials on this website are for general information purposes only and should not be construed as legal advice, legal opinion, or any other advice on any specific facts or circumstances. You should not act or refrain from acting upon this information without seeking professional advice.