- 1). Consolidate debt with a secured personal loan. For people with credit challenges, interest rates are very high. This drives up the cost of financing debt. Apply for secured personal loans with banks or credit unions. With these loans, the debt is secured by an asset, such as a vehicle that is paid off. The interest rate is much lower, which makes payments more affordable.
- 2). Negotiate cash settlements with lenders. Once loans have reached collection status, companies are willing to accept cash settlements. With a cash settlement, you pay a lump sum (less than the debt amount) to pay off the loan in full.
- 3). Request lower payments on a mortgage. If you have a mortgage, you might be able to lower monthly payments. Loan modification is a program offered by lenders to assist borrowers struggling financially. If you have debt that exceeds 55 percent of your family's total income, you will likely qualify, according to CNN Money. Once payments are lowered, funds are freed up to pay for other debt obligations.
- 4). Create a plan for paying off your remaining debt. Make a list of debt obligations. Put the highest interest debt at the top. Focus on paying off a single obligation with the highest interest rate. Once the debt is paid, move on to the next highest obligation.
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