Did you know that a little debt couldn’t hurt? In fact, a little debt can be a good thing because if you have no debts, it’s almost impossible to get credit. It’s a “Catch-22”. People who have no debts can have a hard time getting credit, which means they’ll have no debt and may have a hard time getting credit.
Do you have too much debt?
There’s an easy way to determine whether or not you have too much debt. It’s called the debt to income ratio. All you need to do to determine yours is add up all of your income and all of your debts and then divide the total amount of your debt by your total income. If the answer you get back is 50% or higher, you have too much debt. And if you have too much debt you’re either in serious financial trouble or soon will be.
Realize debt relief through a bank loan
The first way to realize relief from your debts is to get a bank loan and pay off all of your creditors. While that won’t eliminate your debt, it will get those creditors off your back and you should end up with a substantially lower monthly payment than the total of the payments you’re currently making. The downside of a debt consolidation loan is that it will take you longer to pay it off then if you were to just pay off your debts the normal way. You’ll also have to be very careful to not take on any new revolving debt until you pay off that loan. Of course, the biggest con of a debt consolidation loan is that you may not be able to get one. Banks are often very hesitant to loan more money to people who are already struggling with debt.
Debt consolidation through consumer credit counseling
A second away to realize debt relief is through consumer credit counseling. You might be able to find a credit counseling agency in your area or barring that via the Internet. In either case, you will have a counselor who will review all of your finances, your budget and your debts and help you develop a plan for repaying your creditors. Your counselor will contact all of them and try to negotiate a reduction of your interest rates and for them to approve your payment plan. Assuming that all of your creditors approve it, you would no longer pay them. The credit-counseling agency would take responsibility for making those payments and you would send it one payment a month until you have completed your plan. You would have to give up all of your credit cards and again, be careful to not take on any new revolving debt until you finish your plan. This generally takes about five years.
“Snowball” your credit card debt
If your biggest problem is credit card debt, you could use a technique called “snowballing” to get debt relief. There are two ways you can do this. The first is to pay off that credit card that has the highest balance first and use the money that you’ve freed up to pay off the card with the second highest balance and on and on until you’ve paid off all your credit cards.
The second way to “snowball” your debt is to pay off the card with the highest interest rate first, then the one with the second highest interest rate and so on.
Debt settlement
The fourth option to achieve debt relief is through debt settlement, which is sometimes called debt negotiation. Our debt counselors are very skilled at debt negotiation and are usually able to settle unsecured debts for much less than what were owed. They’ve saved our clients thousands of dollars and helped them get out of debt in 24 to 48 months. We think debt settlement is the best way to achieve debt relief and if you give us a chance, we can prove it. Call our toll-free number today and let us explain what debt settlement could do for you.
