Climb Your Way Out of Debt: 6 Paths You Can Take Today


If you owe money, you are not alone—in fact, you are part of the overwhelming majority. It’s estimated that eight out of ten Americans are in debt![1]

Whether you’re burdened with credit card debt, student loans, car payments, a mortgage, or any other kind of debt—there are ways to manage it and eventually get out of debt completely. Here are six different strategies you can adopt today to climb out of debt.

Debt Consolidation Loans

Maybe you’re making monthly payments on several different outstanding debts and it’s becoming too much to manage. A debt consolidation loan might be right for you.

A debt consolidation loan means taking out one loan in order to pay off several debts. This new loan simplifies payments; the borrower will now only have one payment to make each month, rather than several. You’ll then make fixed, monthly payments on the new loan until it’s completely paid off. Ideally, this loan will also provide the borrower with lower monthly payments, a lower interest rate, or both.

A debt consolidation loan should be carefully considered, however, because while it will provide you more convenience, it can end up costing you more money. These loans don’t always mean lower monthly payments and interest rates.

Another way to consolidate debt is through credit card debt consolidation.

Many credit card companies allow customers to transfer debt into one account. Like a debt consolidation loan, this simplifies your payment process. This will likely lower your payments, but there is typically a fee. Additionally, it’s important to read the fine print, because the lower interest rates are often only for a limited time. These low-interest credit cards are typically only available to people with good credit.

Debt Management Plans

Another way to deal with debt is through a Debt Management Plan (DMP). Basically, DMPs require that the borrower comes to an agreement with the lender. This agreement details how the debt will be repaid. This arrangement is usually for a term longer than the original repayment schedule. Learn more about debt management plans in the article Debt Consolidation: A Small Solution to a Big Problem.

Most debt management plans are reached through credit counseling services or nonprofits. These credit counseling agencies will negotiate with your creditors on your behalf. Their goal is to lower your monthly payments and have your late fees and penalties waived.[3]

Companies that offer debt management plans often have relationships with banks and credit card companies, which will go a long way in making sure that your interest rates will be lowered so that you can repay what you owe.

But there can be drawbacks to using this method. In addition to having you consolidate all of your payments into one, DMPs will often have you close your credit cards which could affect your credit score. You’ll also see a “DMP” notation appear on your credit report.[4] It’s important to do your research before agreeing to a DMP because the Federal Trade Commission has found that some companies that offer DMPs are out to defraud customers.[5] Should you decide on a debt management plan, you will pay money directly to a credit counseling service, they will then make payments to your various creditors.

According to a recent survey, debt management programs cost the average borrower $24 per month. In addition, most plans require an enrollment fee at the beginning of the plan, but that extra money may be well spent if you save on interest and late fees.[6]

Debt Snowball Method

The debt snowball method helps you prioritize your debts. Simply put, you start by paying off the debt with the lowest outstanding balance. Once that debt is paid off, you move on to the debt with the next lowest outstanding balance, and so on until all of your debts are paid off.

Any amount that was going toward a minimum monthly payment is applied toward the next debt once the first is paid off.

Creating a budget and cutting back wherever possible is also crucial since it will free up funds that can go toward paying down your debts.

Like a snowball rolling down a mountain, the Debt Snowball builds momentum. Because you pay off your smallest debt relatively quickly, it can give you the psychological boost you need to keep going and pay off all of your debts. The drawback to the debt snowball method, though, is that you may end up paying more in interest over time because it focuses on paying off the outstanding principal rather than taking into account the interest being accrued on that principal.

Read more about Debt Snowballs in our Financial Smarts Glossary here.

Debt Avalanche

Debt avalanche is similar to the debt snowball method, but the difference is you pay off the debt with the highest interest rate first and the debt with the lowest interest rate last. This method will likely take longer, though. However, debt avalanche, or debt stacking as it’s also known, often results in the borrower paying less in interest in the long run. This is because they borrowers are paying off the most costly debt first. With the highest interest debt being paid off first, the debt that is left over is accruing less interest, and therefore costs the borrower less money.


Bankruptcy is often the last resort for people and businesses who are overcome with debt.
There are three kinds of bankruptcies that individuals and businesses in the US can file for: Chapter 7 (lenders seize assets and sell them to recoup their funds), Chapter 11 (usually filed by businesses, and involves them reorganizing business affairs and assets), and Chapter 13 (requires that the debtor submit a plan for repayment, usually within a few years).

Though bankruptcy is an option, it shouldn’t be entered into lightly. Once you file for bankruptcy, it can negatively impact your credit score for 10 years. This can hurt your chances of taking out a loan, getting a job, or even finding a place to live.[7]

A Better Personal Loan

If you’re one of the millions of Americans with multiple debts and you need to consolidate, consider a personal installment loan with OppLoans. We offer loans that range from $1,000 to $10,000 with reasonable interest rates and repayment terms anywhere from 6-36 months.

Consolidate your high interest debts with OppLoans. Our rates are up to 125% lower than other personal lenders and we never charge prepayment fees. Apply online, get approved in minutes, and receive your funds as soon as tomorrow. You can manage your debt and OppLoans can help.


[1] Holland, Kelley. “Eight in Ten American Are in Debt: A Study.” Accessed May 27, 2016.

[3] Khalfani-Cox, Lynette. “Debt Management vs. Debt Settlement: Which Is Best?” Accessed May 27, 2016.

[4] “What’s the Difference between a Credit Counselor and a Debt Settlement Company.” Accessed May 27, 2016.

[5] “For People on Debt Management Plans.” Accessed May 27, 2016.

[6] O’Shea, Bev. “How Does Debt Management Work?” Accessed May 27, 2016.

[7] “Debt Relief or Bankruptcy?” Accessed May 27, 2016.

The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.