Are you constantly trying to keep up with the Joneses? Have you gone too far and found yourself overwhelmed by debt?
Financial planning is not everyone’s forte. As a matter of fact, 70% of Americans do not have a long-term financial plan. No savings or investment goals either!
If you aren’t one of the small percentages of Americans that actually make and stick to a formal budget, you may find yourself looking for help with debt relief.
What should you do when you have debts that you can’t afford to pay off? Believe it or not, there are approaches you can take. We take a look at 5 debt relief options that might work for you.
5 Legal Debt Relief Options
You’ll find yourself faced with many debt-relief programs if you go out looking. Keep in mind that some have consequences.
If you have many different sources of debt at various interest rates, you can take out a loan to pay them off. This option allows you to pay off your debt with one affordable monthly payment and, hopefully, at a lower interest rate.
Be aware of the terms of the loan, making sure not to put any of your assets at risk if you fail to repay the loan.
You can hire a debt settlement professional or try to settle your debt yourself. Either way, the goal is to get the creditor to accept a portion of what you owe in one lump sum to settle the debt.
This option is usually for those with really poor credit and it takes some stellar negotiating skills to pull off. This is the reason that you probably want to hire a professional.
Debt Management Plan
Seeking the advice and services of a debt counselor can give you peace of mind and wrangle in your spending habits.
You will be required to close all of your credit cards (which can hurt your credit) but, the credit counseling agency will work to erase fees and lower the interest rate.
You will make one payment to the agency and it will be distributed to your various creditors.
Do not miss a payment! If you do, you take the risk of being kicked out of the program.
Create Your Own Plan
You got yourself into debt. Why not try to get yourself out of it?
First off, you’ll need to curb your spending and put more money aside to pay off your debt.
Do your research on negotiating with creditors. Contact them about working with you to set up a repayment plan on terms that work better for you.
If you have built up so much debt that there is no possible way of repaying, bankruptcy is your last effort at debt relief. It is an expensive option because it requires the services of a bankruptcy attorney.
Chapter 7 Bankruptcy
Cancels all of your debt other than alimony, student loans, child support or back taxes.
Chapter 13 Bankruptcy
Eliminates your debt through a 3-5 year repayment plan.
Bankruptcy protects you from harassment from creditors, but on the other hand, it ruins your credit for a number of years.
The Bottom Line
Educate yourself and choose the best of the debt relief options for you. Visit us to learn more about money issues and many other helpful topics. Your bottom line will thank you.