Getting Out of Debt: You Have Options
When you are drowning in debt, it may seem as though there are only two options: pay it off or file bankruptcy. In reality, there are several ways to reduce and eliminate debt. The five major options include debt reduction, debt consolidation, credit counseling, debt settlement, and bankruptcy. Learn more about each before you decide what to do.
Settle, Consolidate, or Reduce
After falling behind on bills, it can be impossible to catch up. Debt settlements can be effective in this situation. Call the credit card company, student loan office, hospital, or other creditor/collector to explain the problem. They may be able to offer some help.
In some cases, they will reduce the amount of your regular payments or they will accept a partial payment for the debt and close the account. Hospitals are known to completely erase bills if they feel the hardship is one that cannot be recovered from. No matter what, you can’t know your options until you ask the questions.
Taking out a large loan to pay off all bills and have just one monthly payment is debt consolidation. This can be risky, because sometimes the payment is more than the separate bill payments or the interest rate is higher. Do proper calculations before committing to something like this.
Finally, start paying off the one debt that is most reasonable. Then, when money is available after paying off that one debt, put it toward the next debt. Debt reduction is not feasible if funds are not available.
Hire an Expert
Credit counseling services are professional agencies that do debt settlement for you. They will take the details of the debt and set up arrangements with whomever is owed money. You pay a fee to the counseling service each month. You could possibly complete this process independently, although a credit company has knowledge and experience to expedite the process.
Bankruptcy Isn’t Forever
In the instance you are completely buried with no way out, bankruptcy can protect you from being sued, having wages garnished, and having judgments against you. This action involves all debt being completely wiped out. You get to start over, in a sense. However, this is a big hit to a credit score, so it should be carefully considered before making the decision.
Stop feeling hopeless about debt. There are options to help get your head above water. If you cannot decide what to do, there are professional credit repair specialists who can help sort out the situation.