Options for Getting Out of Debt

Consider your options to relieve stress, improve finances and take your life back now.

Do you know your options for getting out of debt? Debt burden is a highly stressful experience. The worry can make for many wakeful nights. Juggling day to day finances is bad enough without the extra concern caused by overdue debt.

There are a variety of things that contribute to out-of-control debt. Poor financial management is certainly a culprit. Mix complete lack of budget planning with uncontrolled impulse spending, and you have a heartburn cocktail.

When we are in such a bad way, we naturally try to find ways to get out from under. The bad news, though, is that the number of viable options reduce significantly as our debts get deeper.

That said, there are still some options to consider if we really want to fix our financial situation.

Debt Consolidation

You might want to consider merging your multiple bills into one loan. With a debt consolidation loan, the lender pays off your existing debt, and you then make one monthly payment to that one lender.

Consider consolidation when:

you need to lower monthly payments

you need more time to pay off the debt

you can have a lower interest rate under one loan

you are willing to make a substantial committment to learn how to manage your money

you are willing to quit using your credit cards

it will be easier to manage a single loan than trying to make multiple payments every month.

Debt consolidation won't decrease the total amount of your debt, but it would buy you time to budget, increase income, decrease expenses and allow you to eventually pay off your debt.

Getting A Second Loan

You could obtain a new loan and use that to pay off the old one. Getting a new loan, you are usually given 30 days to the first payment due date. This would answer the more urgent need at that time. This is not as direct an option as debt consolidation but it is certainly a viable approach, especially if you can prolong the maturity date of your debt and pay a lower interest rate.

File for Bankruptcy

You could file for bankruptcy, although it is best to consider only as a last resort. You should try other,less dramatic, remedies first.

Bankruptcy has benefits, but it also has serious drawbacks. Among them is the negative information it adds to your credit record for 10 years. This can also negatively affect future credit applications.

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