There are five main ways out of debt. They range from a plan you run yourself to a federal court case. The right one depends less on how much you owe than on how your debt compares with your income, and on how long paying it off would realistically take.
Not sure where to start?
The Debt Audit grades your situation, shows how long payoff would take on your own, and explains which of these paths fits your numbers. It takes about five minutes, and nothing you enter is stored or sent.
Run the Debt AuditThe five paths
Pay it off yourself
Snowball or avalanche on your own budget. No fees, no new loan.
Debt consolidation
One new loan or balance transfer at a lower rate, if your credit qualifies.
Credit counseling
A nonprofit budget review, and possibly a debt management plan with lower rates.
Debt settlement
Paying less than you owe. The riskiest option, so read the risks first.
Bankruptcy
A court process that erases or restructures debt. Chapter 7 vs. 13 explained.
How they compare
| Path | You repay | Main cost | Effect on credit | Usually fits when |
|---|---|---|---|---|
| Pay it off yourself | Everything | Interest you’re already paying | Usually positive | Your budget covers the minimums with room to spare |
| Consolidation | Everything | New loan’s interest, plus fees | Small dip at first; can help over time | Your rates are high and your credit gets you a lower one |
| Credit counseling | Everything, often at lower rates | Plan fees, if you enroll in a plan | A plan may close cards; on-time plan payments build history | Minimums are hard to cover, or payoff would take many years |
| Debt settlement | Less than you owe, if creditors agree | Company fees, growing late fees, possible taxes | Serious damage | Rarely the best first choice. Compare the others first. |
| Bankruptcy | Some or none, depending on the chapter | Court and attorney fees | Serious, long-lasting | Debt is far beyond what you could repay in a few years |
How to choose
Three questions narrow it down quickly:
- Can you cover every minimum payment and still have money left over? If yes, paying it off yourself or consolidating are usually the first options to look at. If no, credit counseling is often the place to start.
- How long would paying it off yourself take? A few years is usually workable. Much longer than that, and a plan is easy to abandon, which is when outside help is worth a look.
- How high are your interest rates? High rates are what make consolidation or a debt management plan pay off, because a lower rate means more of each payment goes to the balance.
The Debt Audit asks exactly these questions of your numbers and applies published rules to them. You can read every rule on How the audit works.
Frequently asked questions
What’s the best way to get out of debt?
There isn’t one best way for everyone. If your budget has room, paying it off yourself costs nothing extra. If rates are high and your credit is good, consolidation can lower the cost. If payments don’t fit, credit counseling or, in serious cases, bankruptcy may be more realistic. The Debt Audit shows which fits your numbers.
Which option hurts your credit the least?
Paying it off yourself, with every payment on time, usually helps your credit rather than hurting it. Consolidation and credit counseling usually have smaller effects. Debt settlement and bankruptcy do the most damage.
Is debt consolidation the same as debt settlement?
No. Consolidation replaces your debts with a new loan, and you repay everything. Settlement tries to get creditors to accept less than you owe, usually after you stop paying them, which carries much bigger risks.
When should I consider bankruptcy?
It’s usually worth understanding when your unsecured debt is large compared with your income and the other options won’t realistically clear it. It’s a legal decision with long-lasting effects, so talking to a bankruptcy attorney is worthwhile, and some offer a free first consultation.