Tackling debt is vital to improving financial security, but sometimes it can be overwhelming to think about. Even small steps toward paying down debt can go a long way to making it feel more manageable.

Ideas for Action

1. Identify all debts.

Staff can provide a tool for families to keep track of their debts. Staff can support families in identifying and learning the details of their debt.

Start the Conversation

• “Where are you in terms of debt?”
• “What are your feelings about the debt you have?”

• Debt Log (worksheet)

2. Calculate their debt-to-income ratio.

Staff can use or provide a tool to help families calculate their debt-to-income ratio.

Start the Conversation

• "Do you know why the debt-to-income ratio is important?”

• Debt-to-Income Calculator (worksheet)
•  What is debt-to-income ratio and why does it matter? (video)

3. Consider payment options and make a debt action plan.

Staff can share information about common strategies for paying off debts and support families in creating a plan to begin or continue paying off their debt. A debt action plan could be incorporated into the Family Partnership Agreement (FPA) process.  

Start the Conversation

• "How could you see yourself making progress?”
• “What does your intuition say about how to go about paying this?”

• Debt Action Plan (worksheet)

4. Navigate debt collection.

Staff can help families plan for what to do if they are contacted by a debt collector. Staff can provide information to help families learn about their rights.

Start the Conversation

• "Have you been contacted by a debt collector? What did they say?”

• When Debt Collectors Call (worksheet)
• What is the best way to negotiate a settlement with a debt collector? (video)
• How to Spot a Debt Collection Scam (video)

Refer

Connect families with reputable credit counseling services when needed.

Credit counseling services can help families create a debt repayment strategy that works with their budget. Head Start programs can work with nonprofit credit counseling services accredited by the National Association of Certified Credit Counselors or Association of Credit Counseling Professionals. Nonprofit agencies don’t charge any fees for basic counseling services, and only low monthly fees for debt management plans. Private, for-profit credit counseling services often charge high fees for the same services that nonprofit agencies provide for free.

Learn More with These Resources

• Managing Debt (guide)
• Debt Collection (resource collection)

Last Updated: September 7, 2023