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Getting Out of Debt

Frequent calls from debt collectors are one sure sign that you have financial problems. If this is the case, it's time to get proactive. Talk to your creditors as soon as possible.

Here are some tips for talking with creditors:

  • Be cooperative, not angry.
  • Be prepared with a list of how much you owe.
  • Have all your financial records together and with you.
  • Listen. The debt collector might have ideas that will help you.
  • If you are having trouble with a particular debt collector, ask if you can speak with a different person.

After speaking to a debt collector, you may have follow-up questions or concerns. The Consumer Financial Protection Bureau (CFPB) provides sample letters to help you communicate with a debt collector if you do not believe the debt is yours, if you would like more information about the debt, to stop the debt collector from contacting you and to specify how they can contact you. To access these letters, visit the CFPB's site.


Bankruptcy is a way to eliminate debts or repay them under court protection and supervision. Child support payments, alimony, fines, taxes, and some student loan obligations are typically not eliminated.

Bankruptcy was created to give a hopeless debtor a fresh start and should always be considered a last resort. A bankruptcy will stay on your credit report for up to 10 years, possibly affecting your ability buy or rent a home and will likely result in higher interest rates on future loans.

Types of Bankruptcy

There are many different types of bankruptcy, but the most common are Chapter 7 and Chapter 13.

In a Chapter 7, or "straight bankruptcy," you agree to turn over all of your non-exempt assets to a Chapter 7 trustee. The trustee then sells your assets and distributes the money to your creditors.

Chapter 13, or "reorganization," allows you to keep your property, such as a mortgaged house or car. It includes a plan based on disposable income to pay creditors over three to five years with a single monthly payment.

Your Rights

Creditors do not have the right to harass you. The Fair Debt Collection Practices Act is a federal law that protects you. It forbids collectors from:

  • The use of threat of violence or other criminal means to harm a person, their reputation or property
  • The use of obscene or abusive language
  • Repeated calls with intent to annoy or harass
  • False affiliation with the government, including the use of a badge or uniform
  • Threat of arrest
  • Communication at unusual or inconvenient places and times
  • Communication with third parties without debtor consent
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For more information on debt, debt collection and other important financial topics, visit the Consumer Financial Protection Bureau's Ask CFPB page for clear and impartial answers to make informed choices about your money.

Credit Counseling

Credit counseling agencies can help you get a handle on your debt. They:

  • Review your debt load and income
  • Help you set up a realistic personal budget
  • Negotiate with creditors for reduced payments on bills
  • Assist with planning for future expenses
National Foundation for Credit Counseling

Visit the National Foundation for Credit Counseling website at www.NFCC.org for more information about these debt collection agencies or to find one in your area.

Notable News

Military Student Loan Debt Help Tackling Your Student Loan Debt

If you are a servicemember with student loans - federal or private - and face obstacles accessing financial protections granted to you, view the Consumer Financial Protection Bureau’s tip sheet Tackling Your Student Loan Debt to take command of your debt.

Free military debt collection webinar CFPB Orders Credit Union to Pay Millions for Improper Debt Collection Actions

The CFPB ordered Navy Federal Credit Union (NFCU) to pay $28.5 million for making false threats to collect debts and for placing unfair restrictions on account access. Visit the CFPB’s Newsroom to find out more about how the NFCU violated the Consumer Financial Protection of 2010.