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What to do When You’re Struggling to Make Payments on Debt

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

debt payments

Updated – November 28, 2018

When it comes to making good on debt payments, the struggle is real. One in 4 U.S. adults are behind on their bills, and almost 1 in 10 have debts in collections, according to a 2018 survey from the National Foundation for Credit Counseling.We all know we’re supposed to pay our debts, but sometimes life happens. We run into an unexpected hiccup — a stint of unemployment, a medical emergency — and our budget falls apart.

A healthy emergency fund is by far your best protection, offering a safety net during tough financial times. Arielle Minicozzi, a Phoenix-based certified financial planner, tells MagnifyMoney that saving up three to six months worth of expenses is a good target. You won’t get there overnight, but earmarking part of every paycheck does add up over time, which will amount to a cash reserve you can draw on to cover debt payments when in a pinch.

If you’re learning this lesson after the fact, don’t sweat it. As for rebounding and getting back on the right track, you have more options than you might think. Here’s what to do if you’re struggling to keep up with your debt payments.

How to tackle these 5 forms of debt

Depending on the kind of debt you’re carrying, you have various ways of catching up or staying on time with payments.

Click a debt type below to learn more:

1. Mortgage

Your mortgage is a secured type of debt, which means that there’s an asset serving as collateral — in this case, it’s your home. If you fall seriously behind on your mortgage, your lender is within its rights to foreclose on your house. Fortunately, making one late payment isn’t enough to start proceedings, so you do have some wiggle room.

Generally speaking, most mortgages have a 15-day grace period from the due date where you can still make your payment. You could be hit with a late fee, which isn’t the end of the world if you’re stuck between a rock and a hard place. But things get more serious if you reach the 30-day mark, at which point your lender may report your late payment to the credit bureaus.

When you’re 30 days or more late on a mortgage payment, you put your credit score at risk. It could drop anywhere from 50 to 100 points. Things vary from state to state, but formal foreclosure proceedings typically begin after 120 days.

What to do if you’re struggling with payments

“I’d say your mortgage is one [debt] you really want to prioritize paying, so the important thing is to make sure you don’t wait until you’re delinquent,” Minicozzi said. “As soon as you see that you have a potential issue on your hands — you’ve made a late payment or think you’re about to make a late payment because you’re struggling to pay — you want to call your servicing department right away for your lender.”

Lead with honesty. Minicozzi said a surprising number of lenders are willing to work with borrowers. This may mean reducing or suspending your payments for a brief period or temporarily lowering your interest rate until you get back on your feet. She emphasized that you’ll have the most options if you reach out before you’re way behind on payments.

Programs that could help

The Consumer Financial Protection Bureau (CFPB) recommended connecting with a Department of Housing and Urban Development-approved housing counselor. They can provide free expert insights for avoiding foreclosure. Your mortgage servicer may also have mortgage assistance programs in place for preventing foreclosure so that you can resolve the issue without losing your home.

2. Car loan

Auto loans are another type of secured debt, which means your car is up for grabs if you default on your payments. But, unlike mortgages, Minicozzi said auto loans aren’t as heavily regulated. Translation: The window between missed payments and surrendering your car to repossession often closes fast.

So how many payments do you have to miss before this happens? Lenders in most states can swoop in and seize your car without warning if you’ve defaulted on your loan (i.e., missed a payment). Again, specific state laws vary, but the lender typically can’t breach the peace when repossessing your car. The CFPB said making threats, using physical force or removing your car from your closed garage without your permission all count as breaching the peace. That said, lenders in many states can use a device to deactivate your car’s ignition system.

What to do if you’re struggling with payments

If you have good credit, refinancing your auto loan could pull double duty — reducing your interest rate and bringing down your monthly payment to something that gels better with your budget. If that isn’t on the table, and you don’t see your financial situation changing anytime soon, a last-resort option is to return the car to the lender.

This doesn’t mean that your loan is forgiven, though. In most cases, they’ll sell the car and use the proceeds to pay themselves for costs associated with the sale before applying the remainder toward your loan balance. The only snag here is that it typically isn’t enough to cover everything, so any leftover balance will be on you.

Programs that could help

“Most [lenders] would rather work with you than go through the hassle of going after you,” Chris Jackson, a Los Angeles-based certified financial planner, told MagnifyMoney.

Check with your lender to see if it has any financial hardship assistance programs that could help. Even if it doesn’t have any formal programs in place, it may still be open to striking a deal with you, whether that be temporarily reducing or suspending your payments for a brief period.

3. Student loans

Student loans fall into two main categories: federal loans and private loans. The latter are doled out by private lenders, while federal loans are backed by the government, so they come with unique borrower protections. Grace periods, according to the Department of Education, come standard for federal loans, which gives new grads some time to breathe before they have to start making payments. But private loans are less clear-cut since every lender has its own rules and criteria.

You’re considered delinquent on your account the day after you’ve missed your first payment. If you haven’t made good on your federal loan payment after 90 days, your student loan servicer will report it to the credit bureaus, which can do a number on your credit score. Your payment history makes up 35% of your FICO score.

Your federal loans will default if no payment is received after 270 days — and a lot of repercussions could follow. For example, your wages could potentially be garnished or the total unpaid balance plus interest may suddenly be due immediately.

Private lenders may be more aggressive. They may report your missed payment to the credit bureaus immediately or mark your loan as in default after as little as three months. Besides the account being sent to collections — which dings your credit score and stays on your credit report for up to seven years — you could also be subject to a lawsuit.

What to do if you’re struggling with payments

The sooner you act, the better. This is where those federal loan protections come into play. If your loan payments are especially high compared to your income, you may be eligible for an income-driven repayment plan, which could significantly reduce your monthly payments. You might also be able to secure a deferment or forbearance, which temporarily stops or reduces your monthly payments for a period.

If you’ve got private loans, all hope isn’t lost. Refinancing your student loans could get you better terms or a lower interest rate — and significantly reduce your monthly payment.

Programs that could help

Jackson recommended looking to your employer to see if it offers any student loan repayment programs. Aetna, for example, matches employees’ U.S.-based loan payments up to $2,000 a year.

“These programs allow employers to make a regular contribution to the loan balance, typically $100 a month, while employees continue to make their regular payments,” Jackson said. “Unlike tuition reimbursement benefits, however, which are tax-free below a certain amount, the employer’s loan contributions are considered taxable income.”

What’s more, there are some federal loan forgiveness programs up for grabs, such as Public Service Loan Forgiveness. The Department of Education also recognizes certain situations, such as bankruptcy or permanent disability, where your loan balance can be discharged.

4. Consumer debt

Unsecured debts such as credit cards and personal loans fall into this camp. Credit card bills come with a minimum payment you have to make each month that tends to fluctuate as your balance increases or decreases. But personal loans have a fixed monthly payment that stays the same for the life of the loan.

Falling behind on your payments is no small thing. Remember: Your payment history accounts for over one-third of your credit score. That’s not to say that a single late payment is going to automatically tank your credit, but if you haven’t paid after 30 days, things start getting more serious. At this point, your credit score can go down anywhere from 60 to 110 points.

Why is your credit score so important? In short, it dictates your borrowing power. Whether you’re applying for a mortgage, an auto loan or a credit card, this magic number determines your interest rates (aka how much you’ll be charged to borrow). A low score could prevent you from being approved altogether. Regardless of what you’re financing, the best rates and terms go to those with good credit.

When you are making payments, the goal of the bank or credit card company is to keep you making those payments. They are very happy receiving the minimum due. By making the payments, you are demonstrating that you are capable and willing to pay. So, the banks are very keen that you keep doing it.

Having said that, you should still try to negotiate with them and see what they can offer. Just give your credit card company a call, and tell them that you are in financial difficulty and will no longer be able to make payments on time. Tell them that you won’t be able to make the payment next month, and you would like to see what forbearance options are available.

Most banks offer two types of forbearance programs:

    • You are having a temporary problem, so they look to reduce your payment for a temporary period of time. For example, you could pay interest only for a few months, and then have the payment increase once your temporary problem is over.
    • You have had a significant change in circumstance (e.g. death in the family and subsequent reduction in earning potential), and you need to have principal forgiven. Since you are reading this, you most likely are suffering from the second (more serious) problem. However, banks are much more likely to give you solutions to the first problem, especially if you are current on your debt.
  • When you are speaking to the bank, don’t accept a solution that only gives temporary relief. For example, if they offer interest-only payments for 3 months, reject that offer. You are looking for serious debt relief right now, not a temporary solution. Your chance of success is low.
  • But you should always give the bank a chance. And, some credit unions may be even more generous, working with you in person. I am still old-fashioned. Even though the banks probably won’t treat you like an individual, it is worth trying. See if you can negotiate a settlement that works. If it doesn’t work, then you may want to consider that you stop paying. Once you become delinquent, you will have more options with your bank. And, the more delinquent you become, the greater the chance that you can reach a settlement.

First Warning

Once you stop making payments, you will seriously hurt your credit score. In fact, once you start down this path, it will be a few years before you will be able to borrow again, and it will be 7 years before this mess completely disappears from your credit report. But just think about this: if you barely afford to make the minimum payment, it will be at least 30 years before the debt disappears. If you stop paying, it will be 7 years until the debt completely disappears from your credit report.

Second Warning 

Once you stop making payments, expect the collections calls, letters, texts and emails to start coming. And they will come with incredible intensity. You should expect to hear from every creditor every day for at least 6 months. They will then sell that debt to a collection agency, which will start to contact you daily as well.

Third AND BIGGEST Warning 

Your wages could be garnished. That means your creditor could sue you, and money could be taken out of your salary automatically to make payments on your behalf. There is a federal limit on how much can be garnished (and this only applies to the unsecured debt that we mentioned, not student loans, alimony and other debt).

At most, 25% of your disposable pay can be garnished. Disposable income is your gross salary minus most of your deductions, including federal income tax, social security, Medicare, state tax, health insurance premiums and any involuntary pension contribution. You can use this calculator to see exactly how much money you could have garnished from your wages.

What to do if you’re struggling with payments

Most things in life are up for negotiation. If you find yourself struggling to keep up, Minicozzi said it’s always best to contact the lender as soon as possible.

“You’re more likely to catch more flies with honey than vinegar,” she said. “Review your circumstances, reach out, work with them, and make a good-faith effort to make your payments. If they see that you’re trying to do that, they’re much more likely to work with you than if you hide and pretend like nothing bad is happening, which can lead to potential disaster for your credit.”

Beyond that, there are other ways to make your payments more manageable. Jackson recommended looking into balance transfer offers to consolidate credit card debt. This leverages 0% introductory promo periods during which you can hack away at your balances faster. Doing so typically comes with a 0% to 4% transfer fee, but that’s nothing if you’re up against double-digit interest rates.

Another alternative is to take out a lower-interest debt consolidation loan, then use that to pay off your credit card balances. The new loan will come with a fixed monthly payment, interest rate and repayment timeline, so you’ll know exactly what you’re getting from the start.

You can shop for debt consolidation loan offers using a free tool from LendingTree, MagnifyMoney’s parent company, and may help match you with up to five different lenders.

Programs that could help

Those who are in over their heads with consumer debt may find relief through nonprofit credit counseling. A credit counselor can help you make sense of your rights and work with creditors on your behalf. In some cases, a debt management plan may be the best option. Credit counselors can also help you create an effective budget to set you up for success going forward.

5. Medical bills

A typical employer-sponsored preferred provider organization, or PPO, health plan for an average American family of four will cost over $28,000 this year, according to the 2018 Milliman Medical Index. Some health care expenses, such as monthly premiums, can be expected. But an out-of-the-blue medical bill or emergency can be a shock to your finances, especially if you have a high-deductible health plan.

What’s more, some experts estimate that the majority of medical bills contain a minimum of one error that costs patients money. This includes everything from double billing to inaccurate insurance reimbursement.

Be that as it may, unpaid medical bills can wreak havoc on your credit score. Past-due medical debts are often sold to collection agencies, according to Experian, after which they’re reported to the credit bureaus like any other unpaid debt.

What to do if you’re struggling with payments

The silver lining, according to Jackson, is that medical providers have a reputation for working with patients to resolve billing issues.

“There is almost always room to negotiate your hospital bill, and in some cases you can get it reduced by as much as 90% or even forgiven completely,” he said. “Plus, collection agencies should be more impressed with an offer of a lump sum than with promises to make payments.”

In other words, brush off your negotiation skills and reach out to the provider. Jackson said that nine times out of 10, most are willing to get you on a monthly payment plan, often with 0% interest.

After receiving a medical bill, the CFPB suggests requesting an itemized statement and reviewing it carefully. If you find an error, send a written dispute to the medical provider. From there, you can negotiate to get your bill down even more.

“Don’t be afraid to push that number to see how low you can get the bill, especially if you’re able to pay in cash,” Jackson added.

Those who foresee a big-ticket medical expense on the horizon can also explore a personal loan that’s designed with medical bills in mind. This is an especially attractive option for borrowers with excellent credit as they’ll likely qualify for lower interest rates.

Programs that could help

If you’re on the hook for a medical bill you can’t afford, inquire about hospital-specific financial assistance programs. Sometimes referred to as “charity care,” these programs are designed to help low-income patients get the medical services they need, often by reducing or eliminating the financial responsibility.

The American Hospital Association reported that in 2016, community hospitals provided over $38.3 billion in uncompensated care. You can also see if you’re eligible for state-sponsored Medicaid coverage.

Putting it all together

No matter what kind of debt you have, being in over your head doesn’t have to be the new normal. Beyond the expert-backed steps mentioned above, getting yourself on track with a solid budget and prioritizing your emergency fund is the best way forward. This can help break the debt cycle and create a safety net to see you through whatever unexpected financial curveballs life throws your way.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at

Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here


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College Students and Recent Grads, Pay Down My Debt

Sample Goodwill Letter to Remove a Late Student Loan Payment from Your Credit Report

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’ve pulled your credit report recently and discovered that there’s been a late payment reported on your student loans, you might be wondering what you can do to recover. Late payments can damage your credit, especially if you stop paying your loans for an extended period of time.

We’ve already gone over the repercussions of delinquency and default, but now let’s take a look at another method of repairing your credit report — sending a goodwill letter to your creditor.

What is a goodwill letter?

A “goodwill letter” is a simple way to repair your credit report, and it can be used for both federal and private loans. The purpose of a goodwill letter is to restore your credit to good standing by having a lender or servicer erase a lateness on your credit report.

Typically, those who have experienced financial hardship due to unexpected circumstances have the most success with goodwill letters. They allow you to ask if your student loan servicer can empathize with the situation that caused the lateness and erase it from your report.

It can also be used when you think the late payment is an error — for example, if you were in deferment or forbearance during the time of the late payment and weren’t required to make any payments, or if you know you’ve never been late on a payment before.

What makes a convincing goodwill letter?

If you’ve been looking for a goodwill letter that will work well, we have some tips on what you should include in your letter:

1. An appreciative tone

It’s important that the entire tone of your letter comes off as thankful and conscientious. If you were actually late on your payments due to extenuating circumstances, taking an angry tone probably won’t help your case.

2. Take responsibility

You want to be convincing and honest. Take responsibility for the late payment, and explain why it happened. They need to sympathize with you. Saying you just forgot isn’t going to win you any points.

3. A good recent payment history

Besides sympathy, you want to gain their trust that you will continue to make payments. If your lender sees payments being made on time before and after the period of financial hardship, it might be more willing to give you a break. When you have a pattern of late payments, on the other hand, it’s more difficult to convince them that you’re taking this seriously.

4. Proof of any errors and relevant documents

If you’re writing about a mistake that occurred, still be friendly in tone, but back up the errors with documentation. You’ll need proof that what you’re saying is true. Unfortunately, errors are often made on credit reports, and it may have been a clerical error on behalf of your servicer. If you have any written correspondence with them, you’ll want to include it.

5. Simple and to the point

The last thing to keep in mind is to craft a short and simple letter. Get straight to the point while telling your story. The people reviewing your letter don’t want to read an essay, and the easier you make their lives, the better.

Sample goodwill letter No. 1

Below is a sample goodwill letter for student loans to give you an idea of how to structure your own:

To whom It may concern:

Thank you for taking the time out of your day to read this letter. I just pulled my credit report, and discovered that a late payment was reported on [date] for my account [loan account number].

During that time, my mother fell terminally ill, and I was the only one left to care for her. As such, I had to leave my job, and my savings went toward her health care expenses. I fell on very rough times after she passed away, and was unable to make my student loan payments.

I realize I made a mistake in falling behind, but up until that point, my payment history with you had been spotless. When I was able to gain employment once again, I quickly resumed paying my student loans, making them a priority.

I’m not proud of this black mark on my record, but it’s the only one I have, and I would be extremely grateful if you could honor this request to remove the lateness from my credit report. It would help me immensely in securing other lines of credit so that I can further improve my credit score.

If the lateness cannot be removed entirely, I would still be appreciative if you could make a goodwill adjustment.

Thank you.

Sample goodwill letter No. 2

If you’re writing a letter because the lateness on your credit report is inaccurate, then try something similar to this:

To whom it may concern:

Thank you for taking the time to read this letter. I recently pulled my credit report and found that [Loan servicer] reported a late payment regarding my account [loan account number].

I am requesting that this late payment be assessed for accuracy.

I believe this reporting is incorrect because [list the supporting facts you have]. I have included the documentation to prove that [I made payments during this time / that my loans were in forbearance/deferment and didn’t require any payments].

Please investigate this matter, and if it is found to be inaccurate, remove the lateness from my credit report.

Thank you.

Make sure you provide as many personal details as possible — without making the letter too long, of course. You should also include your name, address and phone number at the top of the letter in case your loan servicer needs to reach you immediately.

Where to send your goodwill letter

Now that your letter is written, it’s time to send it. This can be done either by fax or by mail. Most student loan servicers have their contact information on their website, but you can also look on your billing statements to see if they specify a different address.

Additionally, you can try calling the credit bureau where the lateness was reported to see if they can give you the contact information you need.

It’s important to mention that goodwill letters are not a means to immediate success. Unfortunately, it often takes several attempts to correspond with servicers and lenders to get them to acknowledge that they received a letter from you.

Your best bet is to get a personal contact at the company who has the power to erase the late payment from your credit report.

If all else fails, try as many different communication methods as possible. Phone, mail, fax, live chat (if your servicer offers it) and email them. Several people who have tried this report that it’s possible to wear your servicer down with a decent amount of requests.

Addresses and fax numbers to try

Here are some addresses and fax numbers for several of the larger servicers, as listed on their websites. Again, it may also be worth phoning your servicer to get the name of someone there that can help you. If you have federal student loans, you can also check this Federal Student Aid page for more contact information.


Documents related to deferment, forbearance, repayment plans or enrollment status changes:

Attn: Enrollment Processing

P.O. Box 82565

Lincoln, NE 68501-2565

Fax: 877-402-5816

Great Lakes

Great Lakes

P.O. Box 7860

Madison, WI 53707-7860

Fax: 800-375-5288

Sallie Mae

Sallie Mae

P.O. Box 3229

Wilmington DE 19804-0229

Fax: 855-756-0011


For anything other than federal loans, check here

Navient – U.S. Department of Education Loan Servicing

P.O. Box 9635

Wilkes-Barre, PA 18773-9635

Fax: 866-266-0178


P.O. Box 145122

Salt Lake City, UT


Fax: 801-366-8400


For letters and correspondence

FedLoan Servicing

P.O. Box 69184

Harrisburg, PA 17106-9184

Fax: 717-720-1628


For FFELP and private loans, check here

Edfinancial Services

P.O. Box 36008

Knoxville, TN 37930-6008

Fax: 800-887-6130

Documents to include with your goodwill letter

Don’t let your efforts go to waste by forgetting to send documentation with your letter. Here’s a quick checklist of what you should include:

  • The account number for your loan
  • Your name, address, phone number and email
  • Statements showing proof that you paid (if you’re disputing a late payment)
  • Documentation showing that you’ve paid on time at all other points aside from when you experienced financial hardship (if that’s the case)
  • Identifying documentation so your servicer knows you sent the request

Also note that if you’re mailing anything, you should send it by certified mail with a receipt requested. This way you’ll know whether your letter made it to the servicer.

What to expect after submitting your goodwill letter

Once you submit your goodwill letter, you should hear back from your creditor with a decision in a few weeks. If two to three weeks have passed without word, follow up via email or phone call.

As you know, there’s no guarantee that your goodwill letter will work. The decision to remove a negative mark from your credit report is entirely in the hands of your creditor.

If your creditor rejects your petition, you’ll have to accept the ding on your credit report and take other steps to boost your credit. But if they agree to repair your credit, you should see the delinquency removed from your report and your credit score increase as a result.

A higher credit score can make life a lot easier, whether you want to take out a loan, open a credit card or, in some cases, even rent an apartment. For student loan borrowers, a strong credit score also opens the door to student loan refinancing, a savvy strategy that lets you restructure your debt, possibly changing your monthly payment and potentially saving money on interest.

If your credit score rebounds and you want to take proactive steps to conquer your student debt, refinancing could be the answer you’ve been looking for, so long as you no longer need the protections that come with federal loans.

Either way, though, make sure to keep up with student loan payments so you don’t end up with a delinquent account dragging down your newly repaired credit score.


If you’re interested in exploring goodwill letters further — and the results that others have had — check out these websites:

  • They cover disputes, what to do about them and how to go about rectifying them here.
  • If you have loans with a private lender, and your lender had reported you as late when you weren’t, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) to see if they can help you.
  • myFico Forums: The forums on myFico are populated with helpful individuals that might be able to give you contact information for certain servicers. There are some people reporting success with goodwill letters, and they may be willing to share their letters with others upon request.

It’s worth the time to write a goodwill letter

If you’ve discovered that a late payment has been reported on your credit, and it’s because you fell on hard times or is inaccurate, it’s worth trying to get it erased. These dings on your credit are there to stay for seven to 10 years. That’s a long time, especially if you’re young and hoping to buy a house or a car in the near future. It’s a battle worth fighting.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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Debt, Its Emotional Toll and How to Tackle It

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Debt can feel overwhelming, and studies are increasingly showing that it can lead to a decrease in happiness and life satisfaction, anxiety and even physical symptoms like headaches or loss of sleep.

A study of more than 1,000 student loan borrowers — conducted by Student Loan Hero, which, like MagnifyMoney, is owned by LendingTree — found that:

  • More than 61% of respondents admitted that they’re afraid that their student loan debt worries are spiraling out of their control.
  • More than 70% said they suffer from headaches because of their debt concerns.
  • Some 64.5% of respondents have lost sleep over their debt.
  • 67% reported physical symptoms of anxiety that stemmed from the stress of their student loans.

The study showed a direct correlation between having debt and detracting from happiness. In fact, results revealed that carrying student loan debt is nearly as significant as income when it comes down to predicting financial concern and evaluating life satisfaction.

What studies show about how debt affects your health

Indeed, money can buy happiness, but how much debt one has also weighs heavily into the equation, according to a study from Purdue University. An online college alumni sample of 2,781 individuals from the United States revealed that student debt could take a significant toll on one’s life satisfaction over the long term.

Another survey conducted by the Harris Poll on behalf of the American Institute of Certified Public Accountants (AICPA) showed that 56% of Americans with debt admitted that it negatively impacted their lives. Twenty-eight percent of the 1,004 American adults surveyed said their debt caused stress about their everyday financial decisions, and 21% said it caused tension with their partner.

It may be that such accomplishments as a promotion at work may be marred by knowing your debt is eating up your higher earnings. High debt may also be such a financial burden that borrowers are unable to save for retirement, for emergencies or even such pleasures as a vacation.

High-rate debt can be particularly difficult to carry. Seeing your monthly payments largely going toward fees can make you feel as though you’ll be trapped in debt forever. And if that debt isn’t allowing you to save money, your stress may only grow if you’re suddenly struck with a financial emergency that causes you to take on new debt.

6 tips to dealing with your debt

If you’re dealing with debt and it’s taking a toll on your health, what can you do?

“The first thing a person needs to do is take a close look at how they got into debt in the first place,” advised Carolyn McClanahan, M.D., CFP, who began her career as a physician and is now founder of a financial planning group called Life Planning Partners LLC, based in Jacksonville, Fla. “They should identify what triggered the situation or any bad habits that might have led to their debt, so that they don’t repeat those things going forward. Then, they need to make an actionable plan to figure out how to get out of debt.”

Consider these tips that could help you better handle your debt.

1. Thoroughly research your options

When tackling your debt, it pays off to research your options for dealing with debt. For example, federal student loans come with borrower protections that may help you if you’re struggling with money. You may be eligible for an income-driven repayment plan, which would adjust your monthly payments based on your income. You may also qualify for student loan forgiveness or have the opportunity to defer payments for a period of time.

If you have a mortgage, you could extend your repayment term without refinancing. This is known as mortgage recasting. By extending your repayment term, you could lower your monthly payments, freeing up cash to deal with debts that are a higher priority.

Credit card debt doesn’t have to be such a burden, either. If you lost your job, it may be beneficial to call up your credit card issuer. You may be able to get on a hardship program that reduces your payments for a time. Or, if you have decent credit, you may qualify for a balance transfer credit card with a promotional 0% APR. For a fee, you could move your credit card debt onto your new card to avoid interest charges for a period of time. Pay off that debt before the promotional period ends and you could save a lot of money on interest.

2. Don’t be afraid to negotiate

Many people fail to recognize that there are many instances where you can negotiate and in turn, lower your debt. Take medical bills, for example.

“It can really help to negotiate with the medical provider,” said McClanahan. “If you’re willing to pay them real money over time, you can end up paying pennies on the dollar of what you own,” she said. In addition to negotiating, McClanahan suggested asking hospitals or health centers whether they have any financial assistance programs that you might qualify for.

Furthermore, if you’re accepting a new job offer, don’t be afraid to negotiate a higher starting salary, which in turn could help you windle your way out of debt faster. Research the job market and consider making a compelling case as to why you deserve a higher salary.

3. Take it one debt at a time

If your debt is stretched across multiple credit cards or loans, you may be overwhelmed just by the thought of them. But if you can focus your attention on making extra payments on just one debt, it could help you see some quick wins.

“You ideally want to start by paying off the debt with the highest interest rates first,” McClanahan said. Repaying the debt with the highest rate helps you reduce how much interest you pay over time. Often, this means you’ll focus extra payments toward a credit card balance. Once that debt is paid off, you start making extra payments on your debt with the next-highest rate.

However, you may instead choose to pay off your debt with the lowest balance. This would result in a fast win that will motivate you to keep making extra payments on your debt.

4. Consider therapy

Seek the help of a psychologist or another mental health expert if your concerns about debt are negatively impacting your day-to-day life. A licensed health expert can help you confront your anxieties head on and offer strategies for dealing with them effectively. Also, reach out to your personal network and let those close to you know that you could use their support. It helps to know that you’re not in it alone.

Low-income individuals may want to seek the help of a sliding scale therapist, who will adjust their fees to make therapy more affordable. This can be found on mental health directories like There are also clinics that provide low-fee or free mental health services. To find a clinic near you, visit

5. Enlist the help of a credit counselor or financial planner

Sometimes, it helps to get an outside perspective on your debt, or at least talk to someone who can reveal your options. A credit counselor or financial planner can help you take steps toward getting your finances in order or develop a game plan for getting back on track, McClanahan said.

The National Foundation for Credit Counseling is a nonprofit financial counseling organization that provides a variety of free services, including counseling on credit and debt, bankruptcy and student loans. If you’re interested in hiring a financial planner, you could use the National Association of Personal Financial Advisors to find one.

Outside help could help you better weigh the pros and cons of your options and guide you as you work on your debt.

6. Focus on improving your credit score

Take steps to rebuild your credit and improve your credit score, which in turn, could give you access to more credit in the future. For starters, focus on implementing a plan for paying off debt, and work to keep your balances low on credit cards. Keep in mind that improving your credit score requires small, responsible actions over time, so be patient and set long-term objectives. For more tips on how to improve your FICO score, take a look here.

Indeed, accumulating debt can certainly take an emotional toll and negatively impact your overall life satisfaction. However, you can take simple steps to pay down debt and turn your financial situation around. No financial situation is permanent, and with some patience, persistence and implementing of best practices, you can find yourself back on the path to financial recovery. So take a deep breath, keep your emotions at bay and work on tackling your debt in a practical manner.

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Renee Morad
Renee Morad |

Renee Morad is a writer at MagnifyMoney. You can email Renee here


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