When debt gets heavy: a way out

Marta, 42, has three debts: €800 at 9%, a €4,000 card at 24% and a €2,000 store card at 19%. Then her hours are cut and next month she will be €300 short. What should she do first — and what are her real options?

First steps when payments feel heavy

Debt problems often come from a job loss, illness, a separation or a price shock. They are not a moral failing. These steps help in almost every country:

1. List every debt: balance, rate, minimum payment, due date and whether it is secured.
2. Protect what matters most. Rent or mortgage, energy, taxes and loans secured on your home or car come before cards and store credit.
3. Talk to the lender early, before you miss a payment. Lenders can offer a lower payment for a time, a longer term or a pause. Under the EU’s new consumer credit directive (Article 35), which applies from 20 November 2026, lenders must offer reasonable relief, called forbearance, where appropriate, before they start enforcement.
4. Get free, independent advice. Be careful with anyone who charges up front.

Two ways to attack several debts

Pay the minimum on every debt, then put all extra money on one target:

• The debt avalanche targets the highest interest rate first. It costs the least.
• The debt snowball targets the smallest balance first. It costs more but gives quick wins, which helps some people keep going.

Consolidating and refinancing

Debt consolidation replaces several debts with one loan. Refinancing replaces one loan with a new one on different terms, for example moving a home loan to another bank or from a variable to a fixed rate. Both can help, but only if the total cost falls, which depends on the rate and the term.

If you cannot pay

Missed payments usually escalate like this: late fees and default interest (extra interest on overdue amounts); a report to the credit register; the lender demands the whole balance; collection agencies; and finally court enforcement, where part of your wages or bank balance can be taken. Enforcement is court-supervised, with protected minimums for essentials. If the debt is secured, the collateral can be sold.

A guarantor promises to pay if the borrower does not. The lender can then demand payment from the guarantor, often for the full amount. Only guarantee what you could pay yourself and are willing to lose.

When debts truly cannot be repaid, many countries offer personal bankruptcy: a court procedure where assets that are not protected may be sold for creditors and, if you meet conditions, the remaining debts are discharged after a waiting or probation period. It is a fresh start with costs: it stays on credit records for years, and some debts, such as child support, usually survive.