You’ve probably heard the old cheer, “What do we want? We want a touchdown. When do we want it? We want it now!” If you’re seriously in debt, you might well be thinking, “What do I want? I want out of debt. And when do I want it? I want it now”.
Unfortunately, there is no way to get out of debt “now.” You can find ads on the Internet promising to get you out of debt immediately or to repair your credit, but don’t believe them. It just can’t be done.
Debts just won’t go away
Debts are like a leech that attaches itself to you and just won’t go away. Once you’ve run up a lot of debt, there are only two solutions. You can either file for bankruptcy or find some way to pay them off. If you would rather not have a bankruptcy on your record, you could get a debt consolidation loan and pay off all your creditors at once but, spoiler alert – that doesn’t eliminate your debts. It just moves them from one set of creditors to a new one.
Get a loan and pay off your creditors
The way this works is simple. If you owe, say, $20,000 in credit card debts, you go to your bank or credit union, borrow $20,000 and pay off all your cards. Of course, this assumes you could borrow the $20,000, which may be easier said than done. Banks and even credit unions are usually not very anxious to loan more money to people who are already having a problem with debt.
A secured debt consolidation loan
If you owe $10,000 or more, you will probably have to get a secured loan. This is where you have to pledge some asset to “secure” it. For most people, the asset will be their houses in the form of a second mortgage or homeowner’s equity line of credit (HELOC). If you don’t have a house you could use as collateral or if you don’t have a sufficient amount of equity in it, another option to consider is consumer credit counseling.
Consumer credit counseling might help
Consumer credit counseling has become a very popular way to handle big debt because it can get all those angry creditors and debt collectors off your back and without having to borrow more money to do it. The way this works is pretty simple. You find a legitimate and reputable consumer credit counseling agency, either online or in your area, and go to it for help. You’ll be assigned a debt counselor who will review all your spending and income and help you create a plan for paying off your debts. He or she will then present your plan to your creditors. If they all approve it, you’ll no longer have to pay them. Instead, you’ll pay the credit counseling agency and it will pay your creditors.
The negatives of credit counseling
The biggest downside of credit counseling is that it will probably take five years for you to complete your plan. Your debt counselor may also help you create a budget so you won’t run up any new revolving debt until you complete your plan. You will probably have to surrender all your credit cards. You will also need to be sure you make all your payments on time because if not, your plan could be canceled and you could end up in even worse shape.
The one way to get debts reduced
Whether you choose a debt consolidation loan or consumer counseling, you’ll still owe whatever you owe. In the words of that old adage, you can’t borrow your way out of debt. The only way to get debts reduced without filing for bankruptcy is through debt settlement. Call us today or fill in the form you’ll find on this page to learn more about debt settlement and what it could do to improve your life.