What to do when you can’t keep up with minimum payments

If you’re struggling to make ends meet each month, and you dread going through the process of paying bills, know that you’re not alone. Approximately 300 million Americans carry some form of debt. 1
The good news is that you’ve already identified that reducing your debt is an area you need to work on. If you’re having trouble finding the money to make minimum payments on your debt, ignoring it will only make the problem worse. There are ways to get your finances in order, and there are people who can help you so that you can feel more confident about your future.
A credit counselor can help you get a grip on your balances and set up a payment plan you’re able to keep up with. Before opting for this resource, it’s important to understand what credit counseling is and how it can help you pay down debt in a smart way.
How credit counseling works
Credit counseling organizations offer services that evaluate your financial situation and help you plan and take action to get out of debt. A credit counselor can help you identify options and approaches to deal with your debt and work with you to adjust your day-to-day financial habits if overspending is an issue.  
Credit counseling typically starts with a free consultation, which might be 30 minutes to an hour, to go over your finances. Based on your conversation, the counselor will make suggestions for next steps.
What to discuss with a credit counselor
Here are some of the options you may discuss with a credit counselor:
  • Consolidation means that your various debts, such as credit card bills or loan payments, are rolled into one monthly payment. Your counselor may be able to help you negotiate a lower interest rate on your consolidated debt.
  • A debt management plan (DMP) can allow you to consolidate your consumer debts, lower the interest rate and waive fees, and set up a monthly payment that would erase your debt over the course of two to five years.
  • Income-based repayment options can help you keep up with payments on your student loans and avoid negatively impacting your credit score—or even having your Social Security payments docked if you end up still owing money on your loans when you retire. A credit counselor can facilitate conversations about payment options with your loan issuers.
  • Debt settlement and bankruptcy are last resorts. Either of these options will have a serious impact on your credit score, will take time and money to implement and (adding insult to injury) may hit you with a tax bill on your forgiven debt. Your credit counselor can suggest less drastic options and can help you understand the repercussions in case you do need to pursue this solution.
How to pick a credit counselor
Start by looking for a reputable non-profit agency that offers an initial consultation for free and provides ongoing services for free or a minimal fee.
Once you find a possible credit counseling company, you can look it up on the Better Business Bureau  to see how its services are rated. You can also check the U.S. Trustee Program’s list of approved credit counseling agencies .
Avoid short-term fixes that have long-term consequences
Quick solutions, like taking a payday loan or borrowing from a retirement account, might seem like options to free up cash and pay bills, but they can be costly over time. Payday loans often come with extremely high interest rates that could make your debt situation even worse. Borrowing from your retirement savings means you could lose out on potential compounding of your money, and you may be subject to taxes and penalties if you do not make payments on the loan.
A credit counselor can help you sort through all the available options, including reducing your expenses, and help you prioritize your debts and other monthly payments so you can make good decisions that will lead to a healthy financial future. 
Ready to take control of your finances? Call a credit counselor  today to work on a financial plan. 
TIAA does not provide tax or legal advice. This piece is being provided for educational purposes only and does not constitute a recommendation or advice. You should carefully consider your unique circumstances before making any decisions regarding your student loans.