What Are Your Options When You Have Too Much Debt?

Are you struggling to get out from under a mountain of debt? Does it seem like no matter what you do, you’ll never be able to pay off that credit card or loan? You don’t have to handle it alone. US News My Money offers a few ideas that can help relieve some of this burden. Talk to your lender to learn if these strategies are right for you, or if they offer other options that can help.

When You’re Behind On Your Mortgage

The threat of losing your home makes this one of the worst kinds of debt you could find yourself. Contact your lender and ask about any of the following options.


Forbearance is an installment plan that temporarily reduces or suspends your monthly mortgage payment. This period can last from a few months or a year. While this strategy seems like a great option at first glance, there is a downside. 

During the deferment period, your loan will still accumulate interest. And when forbearance ends, you will have to repay everything. Some lenders may extend the loan term, but not all. It’s important to settle a payment plan before going through with forbearance so you don’t make things harder for yourself.

Loan Modifications

Loan modifications are similar to refinancing. If the lender approves you, they’ll issue a new loan with reduced payments and sometimes a lower interest rate. While this can help in the short-term, it adds several years to the life of the loan, meaning you pay more in interest over time.

Principal Reduction

If you have a federally-backed mortgage through Fannie Mae or Freddie Mac, you could talk to your lender about lowering your loan’s principal, which means smaller monthly payments. If you didn’t finance your loan through these agencies, you could apply through the Home Affordable Modification Program (HAMP).

When You’re Behind On Your Vehicle Payments

Your lender may have several options to prevent your vehicle from getting repossessed, such as:

Loan Deferments

Car financiers frequently offer loan deferments to borrowers who fall behind on their payments. These offer some leeway for one or two missed payments, or temporarily allow you to pay interest rather than the principal. 


If you have good credit, you could qualify for refinancing. This can reduce your interest rate and your monthly payment. However, be mindful of any limitations or hidden fees that could add to the loan’s overall cost.

When You’re Behind On Your Credit Card

Credit card debt can be just as detrimental as falling behind on your home or auto payments. Here are a few strategies to consider if you need help.

Credit Counseling Agencies

Credit counseling agencies are nonprofit organizations that provide debt management assistance. These groups negotiate with your lender to lower your interest rates. So while you’re still on the hook for your debt, credit counseling agencies can help make your monthly payments more manageable. They may even get the lender to stop calling you. 

Debt Settlement Programs

You should only seek assistance from a debt settlement program after researching them with a critical eye. Not every company works in your favor — some may encourage you to stop paying your bills, causing you to default and giving them a chance to create a payment plan on your behalf. 

Not only can these programs ruin your credit, they often come with steep fees and don’t always work in your favor. It’s best to avoid debt settlement programs and stick with a credit counseling agency instead.

Hardship Programs

Hardship programs are a short-term measure to help you pay off some of your debt without hurting your credit score. Contact your credit card provider and ask what options are available. When you call, be honest about your situation and let your issuer know that you can’t afford the full monthly payments. Tell them that you are working to improve your finances and will resume regular payments eventually. Your credit card company will likely be willing to negotiate a payment plan. 

Balance Transfer Credit Cards

These cards allow you to move multiple balances from other high-interest credit cards to a single card with little to no interest. If you have excellent credit, you could get approved for a balance transfer card with zero interest during the introductory period. If you manage to pay off all or most of your debt during this time, you could save a significant amount of money.

The other benefit of a balance transfer credit card is that it makes it easier to manage your debt because you have just one statement instead of several. If you consider one of these cards, make sure to compare terms, conditions, and fees to make sure this method is the right one for you.


  • Williams, Geoff. “10 Debt Relief and Payoff Options.” U.S. News & World Report, U.S. News & World Report, 13 May 2020, money.usnews.com/money/personal-finance/debt/articles/debt-relief-and-payoff-options.