Do-it-yourself debt relief

Debt relief can change the terms or amount of your debt so you can get back on your feet more quickly.

But it is not a magic wand. Debt-relief programs are not the right solution for everyone, and it’s important to understand what the consequences might be.

Debt relief could involve wiping the debt out altogether in bankruptcy; getting changes in your interest rate or payment schedule to lower your payments; or persuading creditors to agree to accept less than the full amount owed.

You can do what credit counselors do in debt management plans: Contact your creditors explain why you fell behind and what concessions you need to catch up. Most credit card companies have hardship programs, and they may be willing to lower your interest rates and waive fees.

You can also educate yourself on debt settlement and negotiate an agreement by contacting creditors yourself. (Learn how you can negotiate a debt settlement on your own.)

If your debt isn’t unsurmountable, more traditional debt-payoff strategies may be available. For example, if your credit score is still good, you may be able to apply for a credit card with a 0% balance transfer offer that can give you some breathing room. Or you may find a debt consolidation loan with a lower interest rate.

Those options won’t hurt your credit; as long as you make the payments, your credit score should rebound.

If you go this route, however, it’s important to have a plan that will prevent you from running up your credit card debt again. It also can be hard to qualify for a new card or loan when you are deeply in debt, because that often leads to missed payments or high balances, and those hurt your credit standing.

What not to do

Sometimes overwhelming debt comes with devastating swiftness — a health crisis, unemployment or a natural disaster. Or maybe it came a little at a time, and now creditors and collection agencies are pressing you to pay, and you just can’t.

If you’re feeling overwhelmed by debt, here are some things not to do:

• Don’t pay a secured debt (like a car payment) late in order to pay an unsecured one (like a hospital bill or credit card). You could lose the collateral that secures that debt (your car).
• Don’t borrow against the equity in your home. You’re putting your home at risk of foreclosure and you may be turning unsecured debt that could be wiped out in bankruptcy into secured debt that can’t.
• Don’t withdraw money from your retirement savings in order to repay unsecured debt. This is financial suicide.
• Think twice about borrowing money from workplace retirement accounts as well. If you lose your job, the loans can become inadvertent withdrawals and trigger a tax bill, which is the last thing you need.
• Don’t make decisions based on which collectors are pressuring you the most; that may lead to actions that aren’t in your best interest. Instead, take time to research your options and choose the best one for your situation.