What Choices Do You Have When You’re in Debt

By Clinton Courier | July 21, 2026 |

When you fall behind on your payments, it can feel like it’s the start of a long bleak road. No one wants to find themselves in debt; however, this is a situation that millions of people find themselves in each and every day.

And while that’s not exactly comforting when you’re struggling with your finances, what can actually help is knowing what your options are to help you get out of debt and move forward.

Debt Settlement

Debt settlement involves negotiating with creditors to pay a reduced lump sum instead of the balance owed, usually after making monthly deposits into a dedicated account over several months. Alex Kleyner, CEO of National Debt Relief, has described settlement as a structured alternative for unsecured debts like credit cards, personal loans, and medical bills specifically for people who’ve already tried cutting expenses or increasing income without enough progress.

Debt settlement has a real impact on credit scores in the short term since accounts get marked as settled rather than paid in full, but it can resolve debt faster and for less monthly than paying the full balance over years.

Debt Management Plan

A debt management plan usually set up through a nonprofit credit counseling agency consolidates multiple unsecured debts into a single monthly payment, often at a reduced interest rate negotiated with creditors.

Unlike settlement, the full balance still gets paid, just on more manageable terms, typically over three to five years. The route tends to suit people who can afford their debt with some adjustment but are struggling with high interest rates which stretch out the timeline unnecessarily. It usually requires the closing of accounts involved so new charges can’t be added while the plan runs.

Debt Consolidation

Consolidation combines several debts onto one new loan or credit line, ideally at a lower interest rate than the original balances carried. A personal loan, a balance transfer credit card, or in some cases a home equity loan can all serve this purpose. The upside is a single payment and potentially lower total interest, but it only helps if the new rate is genuinely better and the underlying but it only helps if the new rate is genuinely better and the underlying spending habits that created the debt actually change; otherwise the original balances can end up replaced rather than resolved. Balance transfer cards in particular often carry a promotional 0 percent rate that expires after a set period, so the payoff timeline matters just as much as the rate itself.

Bankruptcy

Chapter 7 and Chapter 13 bankruptcy remain a legal option when debt has become unmanageable through other means. Chapter 7 can discharge most unsecured debt entirely but may require giving up certain assets, while Chapter 13 sets up a court-approved repayment plan over three to five years while allowing the person to keep their property. Bankruptcy carries a longer-lasting mark on credit reports than most other options, generally seven to ten years, and it isn’t available for every type of debt, but for genuinely overwhelming situations it offers a legal reset that other routes don’t provide.