Alternative Debt Solutions: Getting Out of Debt

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If your monthly debt payments outside of mortgage or rent exceed 20% of your income, you have a debt problem that requires attention.

The good news is you have options.

You have a handful of alternative debt solutions to evaluate and decide which one is best. Your answer may depend on the debt you have, be it too much credit card debt or overwhelming medical bills.

We call these alternative solutions because they are ways to tackle your debt before contacting and working with a traditional debt-relief company.

Basic Alternatives to Get Out of Debt

The first alternative to figuring out your debt situation is credit counseling. This is a step we always recommend because you get an expert evaluation of the magnitude of your debt and advice on what might solve the problem right now.

You will receive help from a financial professional analyzing your monthly expense obligations and income and suggesting the best ways to deal with them. This is something you can do yourself, but a second or third pair of eyes on the financial picture can only help.

After that, you can consider whether your debt is something you can tackle on your own or if you want to engage in another debt-relief option like debt management or bankruptcy.

Credit Counseling

Nonprofit credit counseling from an NFCC member agency, such as InCharge Debt Solutions, can help you pay off your credit card debt faster and at lower interest rates. You can start online or call InCharge directly.

Credit counseling begins with  a call to a certified credit counselor, who  will ask you a series of questions to identify the root cause of your financial distress. Before they can recommend a solution to your problem, they must have a thorough understanding of your debt situation.

Next, the counselor will conduct a financial analysis by helping you create a monthly spending plan and budget. This data provides insight into how much money you spend each month vs. your total monthly income — and helps you decide which solution best fits your needs.

The Do-It-Yourself Approach

After conducting your financial analysis and budget, your counselor might suggest the do-it-yourself (DIY) approach. If this is the route you want to take, it is imperative that you understand the tactics to use and potential pitfalls if you make a mistake.

Among the things you can do yourself:

  • Completing self-help educational programs: You should have a firm grasp of budgeting, money management and how personal credit works.
  • Getting a second job: The more money you have coming in, the more you can pay off debt quickly. Plus, the more time you work, the less time you have to spend.
  • Cutting up your credit cards: This technique will depend on your lifestyle, but if you’re overextended, getting rid of your cards is something you should consider. Regardless, you want to lower your expenses.
  • Picking a credit-card payoff strategy: There are several strategies to payoff off credit card balances. One is to first pay off the card with the highest interest rate, while another is to pay off the one with the lowest balance.
  • Negotiating with creditors: This is a skill that can be hard to master because it’s almost always done on the phone, and on the other end is someone who is a professional. However, you will save serious money if you can master this.

When negotiating with creditors, you’ll find that some negotiate lower payments or interest rates, or waive late charges and other fees, because they realize that it’s better to receive some of the money owed than none of it. But you will have to ask yourself if you have the ability and temperament to conduct difficult, time-consuming negotiations alone.

Debt Management Program (DMP)

The credit counselor may suggest a debt management program, in which the counselor works directly with creditors on your behalf to lower the interest rate and monthly payment on credit card debt.. It also provides additional education, guidance, and motivation to make sure you stick with your plan and pay down your debt. You will send a single payment each month to InCharge, and we then pay the agreed upon amount to each creditor, on time and consistently.

While debt management services may save you money by lowering interest rates, they never negotiate with creditors to pay less than the total principal amount owed.

Paying less than what is owed is called debt settlement. It can be a debt-relief alternative, but thee are several negatives related to it, not the least of which is a note on your credit report for seven years that says “Paid Less Than Owed.”

That does a lot of damage to your credit score, reducing it by as much as 100 points.

» Read More: How to Choose the Best Debt Management Plan for You


You should file bankruptcy only as an absolute last resort. Bankruptcy is a court action that helps people who can no longer pay their debts. It provides people with a second chance by liquidating assets or setting up a repayment plan to pay off those debts. It stops attempts by creditors or collection agencies to collect from you.

However, it comes at an excessive cost: It stays on your credit report for 7-10 years, causing credit difficulties when you try to borrow money or qualify for credit cards. It can also restrict you from certain types of employment.

Never think of bankruptcy as a quick or free way to get out of debt, as it can destroy your credit worthiness for a long time.

Chapter 7 bankruptcy discharges virtually all of your consumer debts but does not eliminate secured debt, so you could still lose your home if you fall behind in your mortgage payments. You must also pay student loans, alimony, child support, income taxes and legal fines.

When people file for Chapter 13 bankruptcy, a court-appointed trustee oversees a strict repayment plan to pay off your debts in 3-5years.

Although bankruptcy may fix your short-term problems, it stays on your credit report for so long, you should only use it in an extreme situation. Some people who file for bankruptcy make the mistake of doing it without exploring all their options. They often never realize they have other, more practical, choices that preserve their credit standing.

Bottom line: Know that you have options for getting out of debt. Explore them fully. The key is finding the right solution for you.

Other Debt Alternative Solutions

The alternatives from above are not all the solutions to reduce or eliminate debt. The most effective way to get help is not through reading a book or an article but by getting help from someone trained in handling difficult debt problems.

That is why it is critical, if you are suffering from overwhelming debt, to contact a certified credit counselor from a nonprofit agency like InCharge Debt Solutions. By working one-on-one with a counselor, you’ll determine the best plan to address your debt.

Other Resources for You:

Everyone at InCharge Debt Solutions hopes you find the help you are looking for. We stand ready to help you discover the solution that is right for you.

About The Author

Alan Schmadtke

Alan Schmadtke is the founder and president of MacGuffin Publishing, a content marketing firm in Central Florida. Prior to that, Alan was chief people officer at Launch That, for whom he spearheaded employee training and development, including seminars about the importance of retirement savings and adult money management. He also has vast experience as a reporter, editor and leader at the Orlando Sentinel. He lives in Cape Canaveral.


  1. N.A. (ND) Bankruptcy. Retrieved from
  2. N.A. (ND) Federal Rules of Bankruptcy Procedure, Part IV: The Debtor: Duties and Benefits. Retrieved from