Millennials owe a staggering $90K on average and a third say they're at risk of bankruptcy. Here are 3 tips to help you get out of the red

Millennials are in major debt

Contrary to popular belief or urban myth, millennials aren’t foundering because they’re partial to the occasional avocado treat.

In fact, 86% of survey respondents said a major life event or change exacerbated their debt, such as a job loss, medical costs or getting hitched and having kids.

Then you have the usual suspects such as credit card debt and student loan balances.
And 7-in-10 report living paycheck to paycheck, which means many can’t afford to stash funds for emergency savings or retirement.

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What you can do before you declare bankruptcy

Filing for bankruptcy can wipe out most of your debts when they become unmanageable. But it also means you’ll lose many of your assets as you pay off your creditors, and the filing stays on your credit report for up to seven years (if you file for Chapter 13, where you repay all or part of your debts via wages) or 10 years (if you file for Chapter 7, where you liquidate your nonexempt property and distribute the proceeds to creditors).

Either way, it becomes pretty difficult to secure more credit in the future — whether that be in the form of a car loan or credit card.

Here are three ways to pay off your debts and avoid becoming insolvent.

1. Consider credit counseling

Talk to a professional who can take a close look at your financial situation and advise you on how to budget, manage expenses and pay down debts.

A credit counselor can put you on a personalized debt management plan or negotiate with your creditors to extend repayment periods and/or lower interest rates.

Credit counseling is usually offered by nonprofit organizations and some services come free of charge. You can speak with a trained counselor online, over the phone or in person. Just make sure to research the company along with the counselor’s qualifications and certifications beforehand. Beware of for-profit “credit doctor” companies, which often charge hefty fees for the same services the nonprofits provide.

2. Negotiate with your creditor

There’s no harm in reaching out to your lender to negotiate more favorable terms, especially if you’ve been a reliable borrower with a history of on-time payments or have a solid credit score.

You could request they reduce or remove the monthly minimum payment, lower the amount you owe in interest or waive past late fees. Some lenders will even agree to settle your debt outright with a lump-sum payment.

But prepare to follow through on your promises. Stick to the new repayment plan lest you add to your debt load, sink your credit score or hurt your relationship with your creditor.

3. Consolidate your debts

If you have way too many debts keeping you up at night, you should think about rolling them into one account so only one bill comes due each month.

A debt consolidation loan with a lower interest rate can save you money over the long run. A credit score of at least 670 may be required to qualify you for a better rate than what you pay now.

Or, leverage a credit card balance transfer offer, so long as you avoid overpaying in fees compared to what you currently owe in interest. While transfer fees typically range between 3% and 5%, some cards will offer an introductory 0% APR, which opens the door to paying off your balance without accruing interest.