When you are in debt, it can feel like there are very few options and that the walls are closing in. However, that’s not the case. Depending on your circumstances, you can start planning your exit now and make it reliably. Here are some of the options you might want to consider.

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The snowball method

If you have some time to start budgeting, then you should. Find the wiggle room you need in your money and put aside some cash each paycheck that goes immediately and directly towards your debt. The snowball method involves paying off the smallest debts first, helping you satisfy some creditors, and giving you some momentum and a morale boost to keep on going, paying off bigger and bigger loans as you do.

Tackling the biggest first

The advantages of the snowball method are that you can close some debts very quickly, giving you some hope that there is light at the end of the tunnel if you keep going. However, if you’re able to hold that resolve, you might want to pay off the largest debts or those with the highest interest rates first. If you do, then you will better be able to reduce the total final costs of paying off all your debts.

Debt consolidation

If you have some debts that have a much higher interest rating than the others, and the creditors aren’t willing to cap or reduce it, then you might want to start looking at other providers. Debt consolidation involves taking on a loan from another creditor, paying off your other creditors in full. It’s a good way to move all your existing debts to one place, but you must be certain that you can pay off the resulting arrangement before you agree to it.

IVAs

When negotiating with your creditors, it’s always a good idea to have a firm offer to make them. An IVA, or individual voluntary agreement, might be just the offer. It’s a legally binding arrangement that freezes the debt, giving you the time and space needed to pay it off, often over a longer term, while also preventing the creditor from taking any action against you. It’s often used specifically to avoid bankruptcy.

Bankruptcy

If you have no other options, then it is worth considering looking at bankruptcy. This should only be done if you can’t come to any agreements with your creditors after informing them of your situation. It involves liquidizing all assets, paying off what you can, and then wiping the slate clean. However, it comes at a very steep cost, hitting your credit rating harder than just about any default. It takes time to recover from, but it can help you escape the stress of continuously mounting debt.

When looking at options to help you get out of debt, it’s important to be wary and ensure that you’re avoiding deals that sound too good to be true, like payday loans. Often, they aren’t true and can saddle you with more debt than you started with.