Breaking Free from the Burden of Unpaid Bills


Struggling to pay your debts can be worrisome as these debts start piling up and debt collectors are reaching out to you non-stop. This can cause you to become stressed and even ill trying to find ways to settle your debts to avoid this constant reminder of unpaid bills.

There are ways that you can become burden free from the bills that you absolutely cannot afford to pay because of financial hardships or any obstacles that might be in the way.

You can find out how to make it when you find yourself stuck in a position where you are unable to pay all your bills.

Secured vs Unsecured Debt

To understand the severity of your unpaid bills, you need to firstly understand the difference between unsecured and secured debt.

Secured debt are debts that have assets attached to them, whereas unsecured debt are bills that you owe on a service. If you are behind on a secure debt you can lose the assets attached to them such as a car or your house, whereas owing medical bills or a student loan is not as serious as it may seem.

What happens with unpaid debts?

If you aren’t paying your debt, they will be placed in a debt collection agency where debt collectors will reach out to you concerning this unpaid debt.

It will also affect your credit score and credit history which will discredit you from any new purchases until your debt is paid up and you have no bad debt attached to your name.

Use Debt Relief Options

Using debt relief options may not be everyone’s first choice but it can help you get back on your feet quicker than struggling on trying to pay up all your debts.

You should seek debt relief when you have no way of paying back all your unsecured debt within the next five years or when your unsecured debt totals at least half of your gross income.

Although debt relief does sound like the perfect option, you should be wary of debt relief scams which can lead to further debt problems. Make sure that you understand the agreements with the debt relief company before you sign anything.

Here are some of the things you need to consider before you agree to the debt relief services.

  • What the fees are that you will pay.
  • What you need to be eligible/qualify for this service.
  • Which of your creditors are being paid and how much is being paid.
  • Make sure that the payments are going to the correct agency if you have already been handed over to a debt collectors agency.
  • What the tax implications of this process is.

The different debt relief options available

Debt Relief using Debt Settlement

This is often a last option for those that are unable to file for bankruptcy. This means to stop paying your creditors and to put all your money in an escrow account. As the creditor receives no payments while your money multiples, they might be persuaded to take a smaller lump-sum offer without further payments to settle the debt.

However, additional costs can occur with collection calls, legal action against you and even penalty fees with no protection against this even while you are still negotiating the settlement fees with your creditors.

You can also decide to settle a debt on your own, and make arrangements with creditors if you feel that you won’t be able to pay off the debt for years.

Debt Relief using Bankruptcy (liquidation)

If you qualify to file for bankruptcy then all your debt can be cleared within three/four months.

Talking to a bankruptcy lawyer is free so even if you do not qualify this also doesn’t add anymore debt to the debt you already have. You can file for chapter 7 bankruptcy, this type of debt relief can erase credit card debts and some unsecured medical bills and personal loans.

However, you should keep the following in mind when filing for bankruptcy.

  • This can stay on your credit history for up to 10 years even if you are working towards cleaning your name off old bad debts.
  • If you had someone cosign for you, and you file for bankruptcy, that person will become the person solely responsible for the debt you incurred together.
  • If you happen to make more debt, and they pile up after filing for bankruptcy, you can only file again after 8 years.
  • Depending on the assets you have, you might lose them when you file for bankruptcy; however, some vehicles can be kept if they fall within a certain value.
  • If you owe taxes, student loans and child support these don’t fall away when you file for bankruptcy.

Sometimes people with much bigger debt need to file for chapter 13 bankruptcy which is a three to five year repayment plan looking at your income and your debts. If you are able to pay the repayment plan without falling behind, the rest of the  unsecured debt would fall away. Although this might not be an ideal option for many, with a chapter 13 bankruptcy file you at least get to keep your house.

A chapter 13 bankruptcy file stays on your credit record for 7 years after filing.

Debt Relief through debt management plans

These plans are used to pay unsecured debts in full. They are usually given a reduced rate and you only pay one amount each month to a credit counselling agency which will then pay each of your creditors.

One thing to keep in mind is that you cannot use your credit cards during this time as these accounts will be closed. These plans also do not affect your credit score negatively but the less accounts you have the lower your credit score might be.

If you miss a payment however you could lose the whole payment plan which puts you back at square one.

Do-It-Yourself Debt Repayments

You can also do it on your own by approaching your creditors and setting up a repayment plan that works for you. They can also assist you with reducing the interest rates or switching the terms of payment to allow you to pay less each month but still make your monthly payments.

You can also visit your bank and apply for a debt consolidation loan which can help you settle all those debts depending how much you qualify for and only end up paying one debt back.

Tips On How To Avoid Getting Deeper Into Debt

Here are some tips to help you not overburden yourself while you are in debt.

  • Don’t use your home as leverage when making debts as you might lose it if you cannot meet your repayments.
  • Do not make a loan from your retirement fund to settle your unsecured debts.
  • If you have a work retirement fund as well, avoid borrowing money from there as these have to be paid back with interest.
  • Pay your secured debt in full, and make payment arrangements for those unsecured debts.


Being stuck with overwhelming debt is not planned for and with the rise of inflation and the price hike of basic needs and services it is something that can pile up if you have other important commitments.

Using the above mentioned tips as a guide to help you get out of your debt should be helpful to avoid putting yourself in a tougher financial situation of losing your assets or being summoned to court to pay your debts.

Remember to pay your secured debts always as these are the ones that can uproot your whole life if not taken care of.


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