Debt Help

Debt help

Many individuals feel they have to file bankruptcy the moment they think they are in over their heads, and they feel like there is no hope to get out of financial troubles. Bankruptcy however, can be used as the last method to consolidate debt, and after all other options have been thoroughly researched and will not work.

Before making the decision to consider bankruptcy, consider each of the following alternatives:

• Refinancing

• Debt Consolidation

• Debt Settlement

• Debt Negotiation

If after you’ve considered each alternative to bankruptcy, you still think that your accounts are greater than the income you have at your disposal to make payments every month, you may have no choice other than bankruptcy.

Refinancing

If you are a home owner and have equity in your home, it could be feasible for you to get aproveed for money from the equity you have in your home, and use it to eliminate your other debt. This will consolidate the monthly payments on each of your debts that you have used your refinance to pay off, and allow you to make a single, lower monthly payment. If you are able to use the refinancing of your home to get rid of your your accounts, make sure that you do not rack up more unsecured debt, because before you know it you will be right back where you started before the refinance!

Debt Consolidation

Many individuals are able to get rid of all of their monthly credit card and loan payments by taking out a debt consolidation loan. Typically, a line of credit will require some form of posetion to secure it. Unfortunately, you do need to have fairly good credit in order to obtain a debt consolidation loan, but this is a viable option for someone who finds themselves in over their head before the payments start becoming late.

Debt Settlement

Sometimes you can settle your debt out of court. While it is possible to get a debt settlement on your own, it is advisable that you find a good institution to help you negotiate with your creditors to cut down the amount of money that is owed. Typically, creditors are willing to accept less than the amount that is owed to them if they think you are going to be filing a bankruptcy proposal. They realize that a settlement is going to give them more money on the total debt owed than the bankruptcy will, and it is in their favor to work with you in this situation. In order to settle your debt, you should have money on hand to immediately pay your debts and get them to close the account, and report it as “paid as agreed” to your credit report. If you’ve just received a fairly large tax return for example, you could consider attempting to settle your debt with each creditor by offering them less than the total amount owed to close out the account.

Debt Negotiation

Negotiating your debt can be helpful, although it doesn’t eliminate your credit card debt consolidation. Call each of your creditors and discuss with them that you are having financial difficulties. Explain you are considering bankruptcy, but before you take that leap you would like to see if you can negotiate your debt with each of your creditors to obtain payment arrangements that work better with your financial situation. Some credit card companies will lower the interest rate and stop late fees and finance charges from occurring, and it really helps you start paying down on the balances. The trouble with credit cards is that once you get behind, the interest and finance charges each month are as much as or more than your minimum monthly payments, so you are paying every month and never reducing your balance. With lower interest rates, and creditors who stop the finance charges and late fees temporarily, you can start chipping away at the actual balance, and hopefully pay off a few accounts during the negotiation period.

Be Sociable, Share!

•