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, consider your options to relieve stress, improve finances and take your life back now.
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 commitment 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.
Credit Counseling
Consumer Credit Counseling Services can help you by negotiating monthly payments, late and overlimit fees, and interest rates with your creditors. CCCS will also help you learn how to budget and teach good money management skills so you can improve your financial situation and meet financial goals.
Debt Settlement
Debt Settlement is where you negotiate with a creditor to reduce the principal balance of what you owe. This usually requires you to make substantial payments (2-3 months to full payment on the reduced balance) or pay the agreed settled amount in full.
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.
Mortgage Loans: Home Equity, Refinancing & 2nd Mortgages require you to commit to get your finances under control or lose your home! Find out what you need to know to come out ahead.