How to get out of debt with bad credit

There are plenty of debt relief solutions – even if you have a poor credit score. 

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If you’re looking for a way to get out of debt, chances are you’ve read about options like balance transfer credit cards with promotional interest rates, debt consolidation loans and home equity loans. However, you’ll typically need a good credit score to access these loans. In fact, if you have poor credit, chances are that it will be nearly impossible for you to find affordable borrowing options. So, are you doomed to struggle with high interest debt for the foreseeable future?

Not at all. Many of those who need debt relief solutions the most usually have poor credit scores. Fortunately, there are plenty of debt relief options for you if your credit isn’t perfect. Below, we’ll break down what you need to know.

Learn more about your debt relief options now. 

How to get out of debt with bad credit

Those with bad credit can use either the snowball or avalanche technique to get out of debt, says Dan Casey, investment advisor and founder of Bridgeriver Advisors in Bloomfield Hills, Michigan. The snowball technique is designed to pay off your smallest credit balance first and build up – or snowball – toward bigger payoffs in the future. “This is good for the person who needs a fast win to help incentivize,” themselves, Casey says.

“The avalanche technique is to tackle the highest rate card,” Casey says. “The amount you pay is based the same way, pay the minimum on the other cards. But the idea is you’ll be making more of a dent by tackling the worst offender.”

But what if these techniques don’t provide enough relief? Here are some other ways to get out of debt if you have bad credit: 

Debt consolidation programs

When you sign up for a debt consolidation program, a representative of the company you work with will ask questions to learn about your debts and your unique financial situation. Representatives of the company then use that information to negotiate better terms and interest with your current creditors. This often results in significantly lower interest rates and minimum payments. 

Once negotiations are complete, the debt consolidation company will generally create a payment plan designed to help you get out of debt as quickly and affordably as possible. You’ll make a single monthly payment to the debt consolidation company and they’ll make individual payments to your creditors on your behalf until your debt is paid off. 

Take advantage of a debt relief program today. 

Debt settlement programs

Debt settlement programs take a more aggressive approach to debt relief. Rather than negotiating lower interest rates on your behalf, these companies work to get a significant portion of your debt forgiven. 

The process usually starts with the debt settlement company creating an affordable payment plan and setting up a special purpose savings account (SPSA) on your behalf. You then stop making payments to your creditors and send your monthly payments to the debt settlement company which stores your payments in your SPSA. When you have enough money saved, the debt settlement company starts negotiating settlements with your creditors. 

Debt settlement programs can produce significant savings. Then again, they tend to have a severely negative impact on consumer credit scores. After all, for the program to work, you have to forgo payments to your lenders for months, if not years. Moreover, once you do settle your debts, the lenders are likely to report the debts as settled, rather than paid as initially agreed. 


Debt relief solutions like those mentioned above can offer a significant amount of support as you work to pay your debt off. However, in some cases, even these programs don’t provide enough relief. If that’s true for you, you may want to consider bankruptcy

Of course, nobody plans on filing bankruptcy, but financial hardships happen. So, if you’ve reached out to debt consolidation and debt settlement experts only to find you simply can’t afford the payments they’ll need you to make, it may be time to reach out to a bankruptcy attorney. 

The bottom line

Having bad credit doesn’t mean you’re doomed to be in debt for the rest of your life. There are still options to consider. Take your first steps toward debt relief today. This includes employing common debt payoff techniques like the snowball and avalanche methods. But it can also incorporate the use of debt consolidation and debt settlement programs to help you boost your financial health. By exploring all of these options and by experimenting with the one that works best for you you’ll improve your chances of getting out of debt even with bad credit.


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