Debt Explained
Is debt bad?
Owing money isn't always bad. Paying your bills when they're due can help you build and improve your credit history.
Debt is bad when you owe money you can't pay back. You might have legal problems if you can't pay back the money. Or debt collectors might call you.
Debt is bad when you owe money you can't pay back. You might have legal problems if you can't pay back the money. Or debt collectors might call you.
Debt Impact
Does debt hurt my credit history?
Sometimes, debt can hurt your credit history. For example, it might hurt your credit if you:
- owe a lot of money on credit cards
- pay bills late
- don’t pay the minimum amount due
Read Your Credit History Explained at consumer.gov/credit to learn more about your credit history.
Money Basics
Debt Relief
How do I get out of debt?
Start by making a budget. You can use the Budget Worksheet at
consumer.gov/budgetworksheet.
Write down how much money you make every month and how much you spend. You might find ways to spend less money. You can then put the money you save toward paying off your debt
Read Making a Budget at consumer.gov/yourmoney to learn more.
Next, call the companies you owe money to. Call the company before it sends your debt to a debt collector. Explain why you’re having trouble paying your bill. Ask for a payment plan. Some companies might let you pay less every month until you’ve repaid all the money.
Read Debt Collectors and Your Rights at
consumer.gov/debt to learn what to do if a debt collector calls you.
Money Basics
What if I need help?
If you need help getting out of debt, a credit counselor may be able to help you make a plan.
Read Getting Help When You're in Debt at consumer.gov/debt to learn more about credit counselors.
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