Only 5 Possible Debt Solutions
Searching for the right debt solutions for your situation can seem very confusing at times. What are your options? Will you be better off with a debt consolidation loan, or is credit counseling better?
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Maybe debt negotiation is the best solution for you?
How will you know what all your options are and which program is best for you and your financial future?
Well, it's actually a lot easier than you think. You see, there's only 5 debt solutions available to you.
- Do-It-Yourself
- Debt Consolidation
- Credit Counseling/Debt Management
- Debt Negotiation
- Bankruptcy
These are all the choices you have. Now all you have to do is learn which one is best for you. Here's a rundown of each one...
Do it Yourself
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This should be your first consideration. The question you have to ask yourself with this option is...
Can you cut spending and save enough money to start paying more than your minimum monthly payments on your debt?
If the answer is yes, then this option is worth it.
If you go this route, you absolutely must develop a budget.
You must do an audit to see exactly how much you're making versus how much you're spending.
Then of course, you will be contacting all your creditors yourself and trying to work out a deal that lowers your payments to something that's more manageable for your current finances.
Doing everything yourself is going to require some hard work, patience and perseverance. If you can't work out a plan with your lenders and creditors, try one of the other solutions listed below.
Debt Consolidation Loans
With this solution, you will roll all of your debt into one loan at lower interest rates and lower monthly payments. This makes your monthly payments more affordable and easier to manage.
Just make sure you'll be saving enough to make it worthwhile.
Debt Management Plans
With a debt management plan, a credit counselor works out a payment schedule between you and your creditors.
Then, you pay money to your credit counselor and they in turn pay off your debt such as credit card bills, car payments, unforeseen medical expenses and any other unsecured debt that you may have.
Why would you want to go this route? Because your creditors might lower your payments and waive a lot of their fees if they know you are working with a reputable credit counseling organization.
They take it as a sign of you being serious about paying your debt.
Debt Negotiation
This debt solution is often advertised as an alternative to bankruptcy. It also gets confused with debt management and credit counseling. But, debt negotiation is not the same as the other two.
Negotiation is a lot riskier than the other two and can have a long lasting negative effect on your credit.
The advertisements claim to be able to save you 20 - 60% of what you owe on your credit cards. But, you have to be careful here.
These debt negotiation companies (also known as debt settlement companies) can ruin your credit if you're not dealing with a reputable company that you feel comfortable with.
They can ruin your credit because they ask you to stop making monthly payments to your creditors.
Then these debt negotiation companies want you to mail the payments to them and they will pay off your debt for you.
But if you stop making payments to your creditors and the debt negotiation company doesn't follow through, your credit can be seriously damaged. It can be a nightmare for your credit report.
That's why many states have laws regulating these companies.
You can check with your Attorney General for more info.
Bankruptcy
This should be your last option for obvious reasons.
It can be a financial burden for years to come. A bankruptcy can stay on your record for seven to ten years.
Needless to say, you should only consider this option if you have no other alternative and you want a new start.
Debt Solutions Made Easy
As you can see, knowing which solution is best for your situation really isn't that hard - once you know ALL of your options.
Budgeting and spending wisely will always be your best long term option. The key is to change the relationship that you have with your money. Make it work for you in savings accounts, instead of against you racking up high interest on a credit card statements.
Those will always be your best debt solutions - no matter what.
Debt relief programs - eliminate all of the extra interest on your credit cards. Lower monthly payments, too.
Get out of debt - learn how to get out of debt and regain control of your finances and your life. This article will show you how.
