Loans Canada Services Are 100% Free. Disclaimer

How To Stop the Debt Spiral

How To Stop the Debt Spiral

It all began when you made a purchase that stretched your finances a little too thin. Then one loan led to another loan and now you find yourself practically drowning in debt. A terrifying thought is beginning to snake its way into your mind – what if you can never get out of debt? Fortunately, you aren’t doomed to a life in financial turmoil. There are in fact effective strategies for digging yourself out of debt

1. Don’t panic!

This may seem blatantly obvious, but many people can’t even begin to plan their route out of debt because they are too consumed with panic over the situation. Take a deep, calming breath and remind yourself that you WILL find a solution.

2. Take inventory of your debts

When debts start to pile up, it is pretty easy to lose track of how much money you owe to whom. Create a detailed list of all your debts including who you owe, how much you have paid to date, how much you still owe, how often payments need to be made, and what the penalties are for missing payments. This list will give you clarity on your debt and overall financial situation and will guide your subsequent debt management decisions.

3. Make cuts wherever you can

Now is not the time to make unnecessary purchases. You should determine if there are any expenses that you can cut until your debts are paid off. These might include expensive or luxury products, entertainment expenses, and meals at restaurants. It may be difficult to deprive yourself of these things, but you will be able to enjoy them again once you are free from debt.

4. Investigate all your options

Debt consolidation

Debt consolidation means you will take out one loan that is sufficient to pay for all of your various debts. The benefit is that you will then only have one loan payment to make per month as opposed to a slew of payments. You might be able to get a better interest rate as well which will save you money. Just remember not to run your accounts back up again because you have extra money.

There are also many debt settlement and reduction programs available to you.

Personal networks

If there are certain payments that you simply cannot make and for some reason you aren’t eligible for loans, you might want to ask family and friends for assistance. It may not be an ideal solution, but it will buy you some time to investigate other options.

Speak with lenders

If you aren’t going to be able to make a scheduled payment, you should absolutely arrange to speak with the lenders. Many lenders have programs designed specifically for borrowers who are in the midst of “financial crisis” and require additional time to make their payments. In addition, you should always prioritize large bills over smaller ones because failure to pay the large bills will incur more serious fees and will be more damaging to your credit.

Declaring bankruptcy

This should only be considered if you have thoroughly explored all other available debt management options. Declaring bankruptcy may require you to sell off property or assets. It is NOT an easy way to escape debt.

The road out of debt is a challenging path, but as long as you keep a level head and investigate all options you should be able to emerge debt-free.

How useful was this post?

Click on a star to rate it!

Posted by in Debt
Caitlin graduated from Dawson College in 2009 and completed her Art History degree from Concordia University in 2013. She started working as a freelance writer for Loans Canada right after University, eventually working her way up to Chief Content Editor. Her work has led to a large expansion of the company’s content department and she manages a staff of talented writers who are passionate about educating Canadian consumers about credit, debt, and all things personal finance. With over five ...


All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster.

Loans Canada and its partners will never ask you for an upfront deposit, upfront fees or upfront insurance payments on a loan. To protect yourself, read more on this topic by visiting our page on loan scams.