Money and Debt

Taking charge of debt

If you owe someone money, you are in debt. Sometimes, maybe due to problems beyond your control, it becomes too much and you need help.

Send this page to:

Understanding the Basics

See what you need to know to take action.

Money you owe someone is called a “debt.” The person or company you owe money to is called your “creditor.” This can be a good thing, like when it helps you pay for a house or college education. But what do you do if it gets to be too much, and you have trouble paying it back?

If you don’t act, things will likely get worse. The key is to take charge. Even if you know you can’t pay, it’s better to try to work with the people you owe money to than to ignore them.

You may be able to take care of the problem yourself

  • A useful first step is make a budget.
  • There’s nothing wrong with contacting the people you owe money to and asking for a new repayment plan. You will find they are often helpful and willing to listen. They don’t want to lose the money you owe them, so it is in their interest to work with you.

Other options

  • A useful tool can be nonprofit credit counseling services. A counseling service will contact your creditors for you and create a repayment plan that works with your budget. If you enroll in one of these plans, it won’t hurt your credit score.
  • There are also for-profit credit repair companies that charge you for their help. Many of these companies are scams and should be avoided.
  • If you are facing severe financial problems, you may want to discuss bankruptcy with a lawyer. 

If you get into difficulty with your bills, at some point you will probably have to deal with your creditors directly, or even debt collectors. You may find yourself facing one of the following situations:

Forms and Letters

Find forms and letters that you can fill out yourself.

Local Government and Community Resources

Find courts and helpful resources in your community.