When You Can’t Pay Your Debts, What Can You Do?

By Jessica Sommerfield

Being in a situation where you can pay your debts is quite frustrating. More so because you never know what actions your creditors can take against you. It makes you constantly fear not knowing what the next call would be about. But you need not despair. 

You can take certain actions to save the situation, if not wholly, then at least partially. You have various options to choose from, and your choice will depend on your financial status.

Here are some of your options when you can’t pay your debts.

Could you ignore them?

Yes, you heard it right. Do nothing. But wait. Doing nothing is only an option if you’re 100% sure you are judgment-proof. Being judgment-proof means your lender can’t get a judgment against you even if they sue you. They won’t be able to collect anything from you. For you to be judgment proof, you must satisfy the following conditions:

l The lenders can’t seize (garnish) your income

2 Exemptions protect all your property

3 Your financial situation isn’t likely to change

4 All your loans are unsecured

If you don’t meet all the above four conditions, you must do something. Seek for other options to remedy your situation.

Be transparent with your creditors.

If you have reached a dead-end in so far as your loan repayment is concerned, negotiating with your creditors can provide you with some relief. Different loan types will have various options you can discuss with your creditors. If you are dealing with mortgages, your lender can reduce the monthly payments or even suspend the payments for some time, but with a loan modification or forbearance. If you are dealing with a credit card loan, negotiating with the lender can help by lowering your interest rates or payments.

The first step in negotiating with your creditors is knowing how much you can pay every month. Once you know that, you can call them one by one, explain your situation and tell them what you can pay comfortably. If you suffered medical problems, job loss, etc. explain and ask for help.

Credit Counseling and a budget

If you didn’t get help from your creditors, the next step would be to contact an accredited and reputable consumer credit counseling agency. Such an agency provides professional money management tips, housing, debt, and budget counseling. They can also refer you to other reputable agencies that can help. 

Credit counseling agencies like Freedom Debt Relief are also experts in negotiations. They can contact your creditor and negotiate better terms on your behalf. If the negotiations are successful, they’ll create a debt management plan for you. 

Freedom Debt Relief – is it a scam? No, Freedom Debt Relief is one of the leading debt consolidation and debt relief agencies in America. They can help lower your monthly payments and interest without you having to file for bankruptcy.

Before you engage a credit counseling agency, remember that you’ll have to pay the agency the same money you’d have used to settle part of your debt. So you have to find out whether the amount you pay will bring some benefits.


Friends and family can come in when you are financially down. Even though this is a short-term option, it can help lower your debt burden. If you have some trusted friends, you can explain to them your financial position and ask for help. Even if they can’t help with the loan repayment, they can help you pay the bankruptcy attorney’s fees.


If all else fails, you can file for bankruptcy. This will provide you relief from your debts and give you time to reorganize yourself. The problem with bankruptcy is that it will stay on your credit report for ten years. This means within this time. You won’t be able to take any loans.

When deeply in debt, consult a financial expert before making decisions. An expert will review your case and help you pick your options when you can’t pay your debts.