Overwhelming debt: finding the right help

By Gina Freeman

Reviewed by Kimberly Rotter

Jun 21, 2023

Read time: 7 min

Mother trying to work with kids annoying her at home

Key takeaways:

  • Debt becomes overwhelming when you can’t see a way out.

  • Overwhelming debt can stress your physical and emotional health.

  • There is always a solution for debt.

There’s help for overwhelming debt, and you can get it. In fact, you can feel better today by taking the first step toward resolving your debt problems. 

Getting help is a big deal. Overwhelming debt is much more than a financial problem. It can also become an emotional problem, a health problem, a family problem, and a relationship problem. You don’t need an academic study to tell you that debt stress can lead to other kinds of stress. 

Let’s look at your options.

How do you deal with overwhelming debt?

This question is sort of like asking “how do you eat an elephant?” The answer is “one bite at a time.” We aren’t going to eat any elephants today. But we’re going to focus on the first step.

First things first. Take a deep breath. Imagine how you’ll feel when your debt is gone. And know that you’ll get there.

Next, make a commitment to yourself to face the problem. Many people have a vague sensation that things are out of control without knowing exactly how much they owe. Face your debt now and know that tomorrow will be better. Because today, you’re taking the first steps toward making it better. 

Make a financial inventory

Get a notepad and pencil, or fire up an app or spreadsheet. 

List every debt you have, including the balance, the monthly payment, any past due amounts, and the interest rate. 

Write down your income from all sources.

Write down your necessary expenses, like your mortgage, car loan, food, utilities, healthcare, transportation, and unavoidable expenses like taxes or child support. 

Ask yourself these questions to find a little clarity and control over the situation. 

  • How much is available to repay debt after covering the necessities?

  • Do you have things you can sell to pay down debt?

  • Can you lower your shelter or transportation costs, such as by sharing a home or replacing your car with something less expensive? 

  • What are your potential sources of additional income? Think side gigs, more hours at work, or finding a better-paying job.

How bad is your debt problem?

Part of evaluating your debt includes figuring out how bad your problem is. The severity of your problem determines which solutions are best for you.

For instance:

  • Can you cover your basic necessities excluding debt payments?

  • If you have money left over, how long would it take to clear your debts? 

  • What caused your debt problems, and how can you avoid a repeat in the future?

  • Is your situation temporary, long-term, or permanent?

If you have a gambling or shopping problem, seek professional help as part of your financial overhaul. You have to address the underlying cause of your debt problems for a permanent fix.

Where can you get help with overwhelming debt?

There are many sources of help for overwhelming debt. Here are the most common solutions from least drastic to most drastic.


Sometimes, you just need to make a budget to get control of your debt. You may be able to dig out by spending less, earning more, or selling assets. Debt repayment doesn’t happen overnight, but you can make it happen. 

Budgeting should always be part of the solution, even if it can’t solve the entire problem alone. You can make a budget yourself with pen and paper or a spreadsheet, or you can use an app that makes it easy to keep track of money coming in and going out.

Debt consolidation loan

Debt consolidation loans could enable you to swap multiple debts and higher interest rates for one loan with a lower interest rate. You’re not guaranteed a lower interest rate than what you’re currently paying, but it wouldn’t make sense to consolidate your debts with a more expensive loan. Typically, people use a personal loan or a fixed-rate home equity loan to pay off credit card balances.


  • Could help your credit profile* 

  • Could lower your monthly payments and provide breathing room

  • Makes payments more manageable because you could replace multiple bills with one

  • Gives you a firm payoff date for the debt


  • Lenders require a minimum credit score. Not everyone will qualify.

  • Doesn’t reduce what you owe

  • Can be risky. If you pay off your credit cards with a loan and then charge the cards back up, you could end up with even more debt and a negative impact on your credit profile.

  • With a home equity loan, you must be able to make the monthly payments, or you risk losing your home—since you pledge your home as collateral to secure the loan

Debt consolidation loans are good choices if you can get better terms than you have—a lower interest rate, more affordable payments, or (preferably) both. Perhaps even more importantly, make sure you have a clear plan to pay off the loan and avoid overwhelming debt in the future. If the debt was the result of something outside your control, like medical bills, you might not be at high risk of repeating the situation. But if emotional spending or lack of budgeting skills led you to be in debt, decide before you get the loan what you’ll do after you pay off the debts. An after-loan plan is especially important if you borrow against your home.

Debt management plan (DMP)

A debt management plan, or DMP, is similar to a debt consolidation loan in that you replace multiple payments with one. However, DMPs aren't loans. They are programs run by nonprofit credit counseling agencies, which are funded by creditors. With a DMP, you make a single payment to the plan, and the counselor distributes it among your creditors. You’ll be required to close all enrolled credit card accounts.


  • You don’t have to qualify for a loan

  • A single payment is easier to manage

  • Includes budgeting advice

  • May be able to get past-due amounts “re-aged” (brought current)

  • Creditor might lower your interest rate or waive fees 


  • Doesn't reduce what you owe

  • Less access to credit (you’ll close all enrolled credit accounts and you may be asked to stop using credit entirely)

  • Can lower credit score when you close accounts

Before committing to a DMP, make sure you can afford it and that it'll get you out of debt in a reasonable timeframe.

Debt resolution 

Debt resolution means negotiating with your creditors to accept less than the full amount you owe. 

The way debt resolution usually works is that you make a lump sum offer that's lower than the total amount that you owe. If the creditor accepts the offer, they consider the account settled. Most creditors won’t consider reducing your debt unless you clearly can’t afford to repay the debt (and you’ve already fallen behind).

To make a lump sum offer to a creditor, you’ll need money. If you don’t already have money set aside (and most people who need help with their debts don’t have money set aside), you can deposit affordable amounts into a savings account and save up for your offers. If you work with a professional debt resolution company, they’ll help you set up a Dedicated Account for this purpose.


  • Resolve your debt for less than you owe.

  • Get rid of debt faster than by making minimum payments.

  • Your monthly deposits are typically less than your minimum payments—which gives you more cash on hand each month.

  • You only have to pay fees once a settlement is reached and you agree to the settlement.


  • Your credit profile can be negatively impacted. 

  • Forgiven amounts may be taxable, unless you’re insolvent. Insolvent means your liabilities (debts) are greater than the worth of your assets (what you own).

Debt resolution is a bigger hammer for overwhelming debt problems that can’t be solved by debt consolidation or debt management. You can do debt resolution yourself or work with an experienced, reputable debt resolution company.

Leave debt behind, so you can move forward

Get rid of your debt and free up your cash flow without a loan or great credit.

Chapter 13 bankruptcy

A Chapter 13 bankruptcy is similar to a DMP in that you make monthly payments into a plan for several years. A bankruptcy trustee distributes these payments to your creditors. Chapter 13 is a public legal process that takes place in court. The judge determines how much you’ll pay and neither you nor your creditors have any say. 

At the end of your plan period (three or five years, depending on your income), any remaining balances are discharged. 


  • Creditors can't opt out

  • Might pay less than the full amount

  • Forgiven amounts aren't taxable

  • Allows you to catch up on past due mortgage payments and avoid foreclosure


  • About half of cases fail (are dismissed with no resolution and no debt discharge) 

  • Payments can be high (all of your disposable income)

  • Process is public

  • You don’t control the process

  • Attorney and court costs

Chapter 13 is for those who earn too much to qualify for Chapter 7 or who don’t want to surrender assets to the court.

Chapter 7 bankruptcy

Chapter 7 is the “clean slate” or liquidation bankruptcy. You must surrender all non-exempt property to the court, and your eligible balances are wiped clean. It usually takes a few months and has a high success rate. 


  • Fastest process for getting rid of debt

  • High success rate

  • Forgiven amounts are tax-free

  • Creditors can't opt out


  • You may have to surrender assets

  • Process is public

  • Lasts longest on your credit report (up to 10 years)

  • Can make you ineligible for some jobs

  • Court and attorney costs

Chapter 7 bankruptcy is a potential solution for severe debt. Despite its downsides, it could make the best financial sense for someone with high debt and low or no assets.  

What makes debt overwhelming?

There's no magic amount that makes debt “overwhelming.”

The difference between a difficult situation and an overwhelming one is hope. If you don’t believe there’s a way out of your debt, it can impact your entire life.

Many people get caught in a debt spiral through no fault of their own. A job loss, illness, divorce, or other curveball can catch you off guard. It happens to the best of us.

If you’ve been blindsided by debt, it’s easy to feel overwhelmed and hopeless. But that won’t solve your problem. Fortunately, even the scariest debt problems can be fixed.

Feeling better about debt

As you can see, there's a solution to even the most overwhelming debt problems. The key is to figure out where you are now—and which process will give you  most relief while doing the least damage. 

Don’t make panic moves like emptying your retirement accounts. Consult an attorney, debt consultant, or credit counselor first. 

* We can't guarantee what will happen to your credit score. Everyone’s situation differs. If you are maintaining on-time monthly payments on the loan and any other accounts you have, you'll be in the best position to experience favorable results.

Gina Freeman - Author

Gina Freeman has been covering personal finance topics for over 20 years. She loves helping consumers understand tough topics and make confident decisions. Her professional history includes mortgage lending, credit scoring, taxes, and bankruptcy. Gina has a BS in financial management from the University of Nevada.

kim rotter 2022 2

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

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