When it comes to your finances, a little debt isn’t always a terrible thing. It helps you maintain your credit and plan for future purchases, whether personal or professional. That’s only so long as you have control of it. When you don’t have control and you can’t find enough wiggle room in your budget to take care of it, panic can set in. Here are a few options you need to consider, even when it seems like you have one.

negotiate. negotiate. negotiate

One of the best things to do as soon as you realize that your debt is no longer manageable is to tell your creditors about it. Though this might feel like getting yourself in trouble, the truth is that there is room for negotiating with creditors, most of the time. They want to make sure they get paid and would not rather have to rely on collections agencies. You may be able to come to a new agreement on the payment period, freeze the interest, or even settle a reduced bill early if you have enough cash available.

5 ways to eliminate debt banner - Tiffany Nicole Forever Blog

restructure your debt

Other methods don’t change how much you owe but do change how you pay it and the interest that can gather over time. This includes debt consolidation. This tactic is used to move multiple debts from multiple creditors to one creditor. Not only can it make it easier to track and manage, but it can curb the long-term impact of high-interest loans as well. It’s not as effective for controlling credit cards, which usually have lower interest rates.

3 ways to protect your money - Tiffany Nicole Forever Blog

wipe the slate clean

If the other options won’t help and you simply cannot manage the level of debt you have, looking at bankruptcy might be the only solution available. It’s a scary word, but it doesn’t necessarily have to be. Bankruptcy erases your debts, leaving you with a clean slate. In return, you liquify your assets to pay your debtors and do take a heavy credit hit. If you have a home, a chapter 13 bankruptcy lawyer might be more effective than going for chapter 7 bankruptcy. It’s effectively a much more drastic debt repayment plan, paying what you can afford at the time but restructuring the rest of it over time.

protect your money

If you’re currently in debt, the notion of protecting your money now might not apply, but it’s good to remember that there are protections you can put in place for the future. Having the cash savings to offer you more wiggle room in how you handle debt is one. An emergency fund can supply the cash you need to pay off a debt early if you can negotiate a small sum with the lender, for instance.

The important thing isn’t just getting out of debt, but what you learn from it. A scary debt situation can be a great opportunity to learn more about planning your purchases and managing your cash, so don’t fall into the same habits or mistakes that got you in trouble in the first place.