What Are My Options If I’m In Debt And Need to Pay it Off?

Debt. Regardless the form, it sucks. While some forms of debt may suck a little less, owing anyone else money just plain sucks. Getting out of debt is always the best option. If you have any form of debt, you should be working at paying it off. Again, some debts are a little less of a priority but should still be worked on.

If you’re unsure what your options are if you are in debt, you may be surprised to know just how many options there are.

debt options

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Budget and Control It Yourself

This is the simplest option. Learning how to properly budget will quite literally save your financially life! Track your spending and look for areas of saving. At the same time calculate what you owe and come up with a plan of action. Though this sounds easy it’s not often that simple. There is usually a reason your debt hasn’t been paid off as of yet and may require more steps than just create a budget a pay off the debt.

You may need to make more money for instance. There are a multitude of ways you can make more money in your spare time from a standard part-time or contract job to selling stuff you already own. Figure out your budget and, if necessary, figure out ways to supplement your income to meet your financial goals.

Conversely, look for areas to cut out or back on within your current budget. You may be surprised how much you can save per month by cutting back!

Debt Management Programs

DMP’s are either for-profit or not-for-profit organizations that help negotiate with creditors on your behalf when you feel you can’t comfortably pay your debts back. Though each company will have their own agenda, simply put, they negotiate for you with your creditors significantly lowering or totally eliminating any interest rate. This works for unsecured debts only. Once you agree upon a contract with the company you make a monthly payment to them and they take all responsibility for dispersing negotiated payments to the creditors in question. This can be advantageous for many financial situations and if you think yours is one of them, check out a local not-for-profit agency to help. You don’t want a for-profit company making money off you when you’re attempting to pay debt off, right?

The downside to the DMP is that there will be a ”flaw” or slight mark against your credit score while enrolled in the program. In Canada at least, the mark remains on your credit score as long as you’re in the program plus two years. Though this may sound intimidating, the alternative of you not even making minimum payments and living in a cycle of missed payments or never paying debts off, is much worse.

Individual Voluntary Arrangements

Getting in an IVA is one of the best way to pay off your debt over a period of time. You can use an insolvency practitioner to get an IVA. IVA Debt is much better than bankruptcy because it gives you more control over your assets than the latter.


This is an obvious very last choice. Rule out ever single other option before pursuing this and though it may seem tempting to just ”eliminate” all your debt there are quite a few financial repercussions you need to consider. Discussing options with a bankruptcy trustee is ideal before making too many decisions.

Getting in debt is a whole lot easier than getting out. Regardless of what route you choose there will be a lot of work an effort involved but when you’re done and debt free it will be so worth it!

7 thoughts on “What Are My Options If I’m In Debt And Need to Pay it Off?

  1. In the US, DMPs don’t directly affect your credit score – the closing of your accounts (which is done when you enroll) affects your debt to income ratio as well as potentially your “oldest aged account” which will affect your credit score. But from what I hear, it rebounds pretty quickly.

  2. I loved that you mentioned “there is usually a reason your debt hasn’t been paid off.” Needing to reduce costs and increase income are probably the number 1 and 2 reasons I’m stuck with my student loan debt! I do have a friend who declared bankruptcy. She got out of the debt situation she was in at the time, but for years that has followed her and made it very had to have a car loan or mortgage without sky-high interest rates. It’s so scary to think about!

  3. I’m a fan of debt management programs. And I agree, sign up for one through a nonprofit agency only. In the US, it’s easy to find one nearby through the National Foundation for Credit Counseling’s website.

    I think the knock on DMPs regarding impacting credit scores is a bit overblown. My suggestion is to keep your eye on the long term. If you’re debt challenged, think five years down the road. Will your credit rating at that point in time be higher or lower if you sign up for a DMP now? The answer should guide your choice.

  4. So I’m in the middle of working on an article that is very similar to this. HAHA I’ll wait a little while to post it. I like that you addressed the DIY method. Many people forget that you can actually get out of debt without help…most of the time.

  5. Tracking our spending was one of the biggest things for us. It allowed us to see where we were wasting money and was a real eye opener. I think just about everyone could rid themselves of debt if they tried to do so. But that will never happen, since it takes effort and some people just don’t want to put in the effort.

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