We borrow money from time to time for various reasons. Perhaps you want to buy a car, purchase a home, take up a home improvement project, or boost your business inventory; the list of reasons people approach lenders for loans is literally endless. But when borrowing, you basically get into a legally binding agreement that requires you to pay back the money in a specified period, along with accrued interest and any penalties or fees the loan might have attracted. That’s basically what loans entail in summary. However, it’s not unheard of to find yourself struggling to pay your debt off due to certain financial constraints. Maybe you or another family member fall ill and most of your income diverted to footing the medical bill. Perhaps you lost your job or your business incurred major losses that ate into your finances and left you dry.

But regardless of the reason for your financial woes, debt is a debt, and lenders will still want their money back. This is when you start receiving debt collection calls, emails, letters, and messages, some of which can be overly frustrating. But facing a debt doesn’t have to give you sleepless nights or make you go into hiding. 

But then again, it’s not unusual to find yourself in the crossroads, not knowing how to go about it or where to look for help. Here are some solutions you can seek when dealing with unmanageable debt.

File for Bankruptcy

This is by far one of the most effective debt management solutions available. However, bankruptcy works best when you know that for sure you cannot manage to keep pace with your debt repayment while catering to other obligations. Individuals, as well as businesses, can file bankruptcy, and depending on which type of bankruptcy you file, the process can either lead to debt restructuring, partial debt forgiveness, or total debt dismissal. 

Nonetheless, this is a court process that often takes some time and requires you to work with an experienced bankruptcy lawyer. This is among the reasons why many people seek alternatives to filing bankruptcy. If you know and understand your options, you can easily cope with the situation; get out of the drain, and even start getting your financial health back in check in no time. Money problems are common and shouldn’t be the end of the road for you, and the pointers that follow can help. 

Consumer Debt Proposal

One thing to note is that apart from being a lengthy and demanding process, filing bankruptcy may have a huge impact on your credit history and reputation. In most places, a bankruptcy stays on record long and may affect your credit score for up to 8 years depending on the jurisdiction it was filed. While it may be the best solution when trapped in a quicksand of debt, a consumer debt proposal can be a great alternative to bankruptcy for dealing with debt stress. This is especially if you are still earning an income high enough to renegotiate a debt repayment plan with your creditors. With a licensed insolvency trustee acting as the administrator, you can agree with your creditors on a new repayment plan where you commit to clearing a portion of the owed amount over a defined time duration of up to 60 months. The trustee may also help negotiate an extension of your debt repayment time.

Debt Consolidation

This is another common avenue you can use to get out of debt, but debt consolidation best works for people who owe more than one creditor, where it sometimes becomes difficult to stay abreast of the repayment schedules and ahead of the deadlines. Some people actually use it as an alternative to bankruptcy. It involves taking up a new loan to pay off smaller amounts and make your debt more manageable. However, this option works best when your credit score is not yet badly affected by your debt. For this reason, you can consider it a protective measure and use it before you get to the point that you’re considering filing bankruptcy.


The best thing about debt consolidation loans is that most of them come at lower interest rates. Since you’ll only have one (bigger) debt to repay, you are also less likely to miss payments, which often attracts penalties and late fees, adding to your woes. For people with unsecured debts such as credit cards and certain personal loans that attract high interests, a debt consolidation loan can come to your rescue.

Finally, you’ll also need to be financially disciplined. This means ensuring you know who you owe, how much you owe them, and how much you’re supposed to pay each creditor at what dates of the month. You’ll also want to work with a strict budget, avoiding unnecessary expenses as much as you can. Even as you seek the solutions above to cope with debts, paying off borrowed money should be among your top priorities.