We all have gone through tough times. Demonetizaiton, GST, and gruelling COVID, all these unforgiving occasions we had to endure in our lives. When essentially it doesn't appear to be cash to go around, with karma all such conditions will be made due through a time of starkness and belt-fixing. Often our debt is a vicious circle, with more and more borrowing needed to simply survive! Eventually, this can mean serious risks such as losing a home become all too real. When things get to this stage, it can be hard to see a way out, but there are few steps you can lead to escape your debt spiral.

Debt Consolidation

If your budget has little leeway for improvement, and your debts are still too large to be handled, then debt consolidation is a popular option that has a good chance of success. The basic idea is to combine all your exisiting debts into a single one, and taking out a loan to pay off all your other borrowings. If done correctly, by ensuring that the new loan is at a lower rate or repaid over a long period, your monthly repayments will be reduced to a much more managable level, even though your overall debt level will not be reduced.

Debt Management Plan

Unfortunately, debt consolidation isn’t an effective solution for everybody. It could be that your debts are simply too huge to be dealt with in this way, or maybe by this stage, your credit rating is so shot that being approved for a new loan simply isn’t a realistic option. In this situation, entering a debt management plan is the next step to consider.

This involves an admission that your debt situation is simply isn’t sustainable, and drastic changes are required. By contacting your creditors and explaining that you have no realistic way of keeping up your repayments, you may be able to restructure the debt to make it more affordable.

This may be through lengthening the repayment term, and reducing the rate of interest, or freezing any further charges to give you a chance to start repaying your principal.

This course of action, relies on the co-operation of your creditors, and for this reason, it is usually a sensible idea to use debt management agency to carry out the negotiations on your behalf. Their experience and lack of emotional involvement usually leads to more success, although you may have to pay a fee for their services. Free credit counselling by charities can also help, but their resources are often limited.

Examine Budget

The first step towards achieving financially stability is to take long, take a hard look at your budget and see if any positive changes can be made. This isn’t a pleasant activity for most people with money worries, but it is an essential step to take. Without this, any other effort to tackle your debt problems will be only a band-aid rather than a possible solution.

Are there any areas in which you can cut back spending? Is there a possible way to earn an extra income in some way? Which debts are causing you most problems? What bills are needed that needs to be paid urgently? Addressing these questions will put your finances on a shoulder footing even if they don’t directly solve your difficulties. With the basics in order, you can now move on to a more proactive solution.


If debt manangement hasn’t solved the problem, personal bankruptcy maybe the only option left. This process needs to be handled by a attorney, and it comes in two basic forms, and bankruptcy is suitable for higher than average earners and allows you to keep hold of some assets such as your home or car. The more common form of bankruptcy in U.S. is Chapter 7, and will use all your available assets to clear as much non-government debt as possible. In both cases, your credit rating will be compeletely shattered, but by the end of the process, you will be freed from your debts.

The best way to avoiding debt problems is not to borrow in the first place, but this will be cold comfort for anyone struggling with unmanageable repayments. Taking control is the only way to escape the spiral, whichever of the above paths you need to follow. One thing is for sure, if your debts are causing you severe difficulties, it is better to take action now as the situation is only likely to get worse if you ignore it.

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