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Financial Education

Managing and Paying Off Debt

Debt can feel overwhelming. This page covers ways to pay it down, your rights, and where to find help.

Paying down debt

To deal with debt you got to first understand how much you owe. Start by listing everything you owe - balances, interest rates, and minimum payments. Knowing the full picture is the first step to making a plan.

  • Debt avalanche
    Pay extra on the debt with the highest interest rate while making minimum payments on the rest. This reduces the total interest you pay over time and can get you out of debt faster.
  • Debt snowball
    Pay extra on the smallest balance first while making minimum payments on the rest. Once that debt is paid off, roll that payment toward the next smallest. Paying off small debts quickly can help some people stay motivated.

Working with your creditors

You can contact your creditors directly to ask for help. Many creditors have hardship programs and will work with you if you explain your situation. It costs nothing to ask.

Things you can request:

  • A lower interest rate
  • A waived late fee or penalty
  • A reduced minimum monthly payment
  • A temporary payment deferment
  • A payment plan if you have fallen behind

Get any agreement in writing before you stop making your regular payments.

Debt consolidation

Debt consolidation means combining multiple debts into a single loan, ideally with a lower interest rate. This can simplify your payments and reduce what you pay in interest.

Common options include personal loans, balance transfer credit cards, and home equity loans.

A note of caution: consolidation can lower your monthly payment by extending your repayment period, which means you may pay more in interest over time. It can also put assets like your home at risk if you use them as collateral. Read the terms carefully before signing anything.

Getting help with debt

If you are not able to make payments, contact your creditors directly. Many offer hardship plans, temporary payment reductions, or deferments that do not require going through a third party.

Nonprofit credit counselors can also review your full financial situation, help you build a realistic budget, and work with your creditors on your behalf, often at no cost.

Debt collectors

Washington law protects you from abusive debt collection practices. Under the Washington State Collection Agency Act, collectors cannot harass or threaten you, make false statements, or call before 8 a.m. or after 9 p.m.

You have the right to request in writing that a collector stop contacting you.

Medical debt

Medical bills are one of the most common sources of debt. Washington has protections for medical debt - including limits on collection practices and access to charity care at hospitals.

If you're struggling with medical bills, help may be available before the debt goes to a collector.

Beware of debt settlement scams

Debt settlement companies are for-profit businesses that negotiate with your creditors on your behalf in exchange for a fee. They are different from nonprofit credit counselors.

There are risks to understand before going this route. Fees can be significant, often a percentage of the enrolled debt or the settled amount. While you are not paying your creditors, your account may be reported as delinquent, your credit score will likely drop, and creditors may still choose to sue you. There is no guarantee a settlement will be reached.

Before working with any debt settlement company, research the company carefully.

Tools and resources

Use these tools to help you pay off your debt.