Drowning in debt is no fun. Have you found your obligations outweighing your means every month? It’s very stressful when you are trying to find ways to make things work and still must provide for your family. If your bills are piling up every month and you are only finding yourself making minimum payments and still not making it by it may be time to find a way out of your debt. How does debt relief work? What are your best options? Below we have listed 5 ways to help you out of your financial crisis.
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This is the first option to consider before any other options. Can you fix your credit on your own? If you haven’t done so well managing your finances up until now are you dedicated and willing to manage them more aggressively to get yourself out? A plus side to managing yourself out of your own debt is that you will not have to pay any extra fees for assistance. You can use your whole spendable amount on paying what you owe.
You will have to be very organized when creating a plan to get yourself out of debt. Make a list of all your creditors and plan a way that you can knock off as many bills as quickly as possible within your own means. When your negotiation starts with your creditors you should have documentation to provide that you are having a very hard time at paying your bills and you are in dire need of assistance.
Possible outcomes of negotiating with your creditors:
Reduced interest rates
A 2-3 month timeout period
Credit repayment program conversion
Debt relief negotiation is a great solution and can get you out of debt the quickest, but most people do not know how to navigate the negotiation process to their advantage. With lack of knowledge can make the process overwhelming and most give up. This is where finding a company to assist in the process can alleviate a lot of your stress. National debt relief companies know the ins and outs of the industry and have many years’ experience in negotiating with lenders.
Consumer credit counseling.
The best debt relief companies offer a free counseling session, whether it’s on the phone or with a local company, where they will look at your finances and thoroughly go over the best options for your individual situation.
You may be recommended, based on your financial situation, to opt into a plan to manage your debt. Your representative will act on your behalf in dealing with your creditors once you sign a contract with them. They can find a program that works within your means. You will pay one monthly payment instead of many individual payments to your lenders, as you usually do. It is possible that your charges for your penalties and your fees you have acquired can be waved. Harassment from your lenders will stop all together because the company knows the right moves to make to make your life a whole lot easier.
Debt Consolidation Programs.
To consolidate your debt into one account is an option many Americans choose when using one of the debt relief programs. The reason is to have lower payments each month and get rid of high interest debt. It doesn’t affect the whole balance that you owe. It just consolidates what you have.
You can consolidate by getting a bank loan or a home equity loan to pay off what you have. You are using collateral to receive your new loan, so this is what is considered a secured loan. If you don’t own a home this is not going to be an option for you. It lengthens the time of paying off the whole amount owed so you end up paying more interest over the course of all those years.
Debt relief companies assist many people with debt settlement. It used to not be a favorable choice but has gained traction in the last few decades. Your debt relief counselor will negotiate with your lenders on your behalf. They try and get them to agree on a price below the whole cost of the initial credit amount if it is agreed upon that you will pay the amount in full. You will begin to make small payments to your debt relief company and when you reach the amount owed to pay the settlement amount on one of your accounts your company will pay it off for you.
One small downside to settlement is that your credit score will be affected temporarily as you are working to repair it through the program that you are utilizing. It is still a better option than having to declare bankruptcy and having the worst credit score in the books.
If you have no income or there is absolutely no way out of your credit card debt, even with an assistance program, your only choice may be to file for bankruptcy. It affects your credit history tremendously. You won’t be able to get a loan or credit for at least three years and at the time your do your interest rates will be through the roof. Your insurance for your cars may go up and buying or renting a home will be very difficult. It stays in your personal file for life and on your credit report of 10 years. New employers ask if you have ever declared bankruptcy because they want to know how well you can manage your own finances if they are going to entrust you with theirs.
You will need to have proof when filing for bankruptcy to prove that you are unable to pay your debts. One requirement you will need to fulfill is to attempt some form of credit counseling before choosing this last resort.
How scary it can be to find yourself in credit card debt but there are options you should consider before filing for bankruptcy. You will find many national debt relief companies if you perform a search on the internet. Do your homework when looking for a reputable company. Find a company that works best for you. If a company asks for fees to be paid before any debts are settled, they are not the right company for you. Don’t let your financial crisis get out of control. Take control of your debts you owe as soon as possible because the longer you wait the worse off you could be.