Being deep in debt is a very stressful situation – especially if what you owe is more than what you are earning every month. Any breadwinner in the family feels this burden day in and day out. The pressure to make sure that the family is provided for is frustrating. While paying for the usual bills, you need to make sure your debts are paid on time and correctly. Not to mention having extra to put aside so you have emergency money for unexpected situations.
5 Different Ways to Achieve Debt Relief
It may seem like a very bleak moment but thankfully, there are options for you to weather out this financial crisis.
1. Pay Down Your Debts Yourself
Before anything else, we’d like you to know that you have the option to fix everything yourself. While it is not guaranteed success as you have proven that you are unable to manage your finances, this could be worth a try. The good thing about this is you will not be burdened with the additional costs of hiring someone to help you out. All your funds can concentrate on paying off your debts.
You need to start off with a budget plan so you know just how much you debt you have and your ability to pay them off. Also, it will provide you with a black and white scenario of your financial standing. Next step is to call your creditors to tell them about your situation. Be prepared to show documents to prove that your claims are true. If they believe you, then you can discuss the possible options for you to be able to meet your debt obligations.
This is the ideal scenario of course. Unfortunately, the average American is unable to do this on their own because they simply do not know what to do. Even if you enlist the help of a free credit consultant, the expertise and professionalism required to negotiate for a new payment term is best left in the hands of those who know how. Otherwise, the desired results may not be achieved.
Thus let us examine your options on hiring a professional to help with your financial woes.
2. Debt Management
This is a program of credit counseling services for troubled credit card holders. These agencies have branched off to the private sector but at least you know that there are cheaper alternatives. Debt management agencies will help you analyze your financial standing, determine how much you can pay, and will negotiate with the creditors on your behalf. The negotiation can be on longer terms or lower monthly amounts – whatever is necessary for you to afford payments. Instead of paying the creditors directly, you will be paying the debt management agency and they will distribute the funds accordingly.
The benefit of going for this type of debt relief option is the possibility of lowered interest rates and monthly payments, waived penalty charges and other fees. Most of all, you will no longer be harassed by your creditors as they will be coursing everything through the debt management agency.
3. Debt Consolidation Loan Programs
Another option is consolidating your debts into one manageable account with a consolidation loan. The main purpose of this is to eliminate the higher interest rate debts, arrive at lower monthly payments and allow you to concentrate on one payment alone. It does not, however, lower your total balance. What you will be doing is to shift everything and put them all in one account. You’re simply moving the debt around.
You must have very good to excellent credit to qualify for a debt consolidation loan with a low interest rate
You cannot qualify for a debt consolidation loan if you have bad credit or have fallen behind on your bills.
You can contact a bank or credit union to assist you with your debt consolidation loan needs.
4. Debt Settlement
Settling your debts used to be a less than reputable practice but it has recently gained prominence. It basically involves a debt relief company negotiating with the creditors on your behalf. The goal is to allow them to agree to a settlement wherein you will pay for a portion of the debt (ideally this should be a sizable amount but not equal to the total balance) and the rest will be forgiven.
As the debt relief company is negotiating with the creditor, you stop paying the bills involved (e.g. monthly credit card bills). Instead, you will be making smaller payments to a separate account to pool in your resources. You need to come up to the pre-planned amount that you have agreed with the debt relief expert handling your case.
Usually, creditors agree to have the borrower pay for only a percentage of their original balance – the rest will be forgiven. Your credit score will be negatively affected with settlement. It is an alternative to bankruptcy so the effects on your credit will be similar – temporarily.
This is the last resort if you are really unable to pay because you don’t have any source of income at the moment. This will, however, tarnish your credit history in a very bad way. You will be unable to get financial assistance in the future – or at least you will find it extremely difficult to do so.
There are two ways to file for bankruptcy – Chapter 7 and Chapter 13. Before you can file on any one of them, you need to show proof of your income and other financial documents to prove if you are of the low, mid or high-income class.
Which Debt Relief Option Is Best For Your Situation?
It all depends on your specific circumstances, income, debt and financial hardship. National Debt Relief offers a free, no obligation consultation to discuss your debt situation and how we can help you.
There are no upfront fees and no fees until you see results. Not to mention a money back guarantee if you are ever unsatisfied. Take 60 seconds and fill out the short consultation form and one of our debt specialists will contact you within minutes, or you can call now – (888) 703-4948.