A lot of people who get into financial difficulties turn to debt consolidation to solve their problems, but this is not an option for everyone.
Debt consolidation, involves either taking out a new loan to pay off your old debts, or using a debt management plan to make it easier and more affordable to repay your creditors.
Both of these options involve repaying your debts in full and depend on you having enough income to make the necessary monthly payments.
For those people in more serious situations who would struggle to afford the payments necessary on a debt management plan, it can sometimes seem like there is no way out of debt.
The problem is that if you accumulate huge debts and you do not have the necessary income to keep up with repayments, you are in a very serious situation because you really cannot afford to repay what you owe.
The solution is to find a mechanism that will allow you to get a huge chunk of your debt written off, so that the remaining amount becomes more affordable for you to deal with.
Fortunately there are some systems available that you can use to achieve this.
Your country of residence will have some bearing on your options, but both the US and the UK have well established routes aimed at getting debt written off.
In the UK there is a formal debt solution called an individual voluntary arrangement, or IVA for short.
This allows you to make monthly payments towards your debts, based on what you can afford, and after the specified period any debt left unpaid is written off.
For some people this means that they can get about 70% of their debt written off.
An IVA normally lasts for five years, so you know exactly when you will be free from debt again.
In the US there is no such thing as an IVA, but the nearest equivalent is debt settlement, which is very well established as a means of settling debts for far less than the full amount.
The way this works is that you use a debt settlement company to negotiate with all of your creditors over a period of time to reach agreements to settle your debts in full for a much smaller amount, which is normally paid as a lump sum.
The usual procedure is to stop paying your creditors when you sign up with a debt settlement company, and start making payments into a separate pot instead.
This fund builds up and is used to make the lump sum payments to creditors when agreements are reached for settlement amounts.
Whether you live in the UK or the US, to be eligible for either of these routes for getting debt written off you will need to be in a serious situation.
You are unlikely to be accepted for either an IVA or debt settlement unless you have a substantial amount of unsecured debt to a few different creditors, and are genuinely struggling to keep up with repayments.