Credit card bills, student financing, and pending medical bills are among the top reasons why several Americans are having difficulties in paying off their loans today. Although everyone’s debt is different the stress is similar. Read here to know more about the sources of debts.
No matter what type or amount of debt you are in we understand that you want to get rid of it as quickly as possible. So what options do you have to eliminate your debt? Here is a quick overview of the top three ways to handle your debt:
Filing bankruptcy is one way you can reduce or even eliminate your debt. Bankruptcy is an act governed by a law that allows United States citizens to get out of debt.
There are two main types of personal bankruptcy: Chapter 7 and Chapter 13.
The first, Chapter 7, is most beneficial to individuals or families with high amounts of unsecured debt (credit cards, medical bills) and low amounts of assets (paid in full homes or vehicles). Chapter 7 can eliminate most types of unsecured debt and give the debtor a fresh start.
On the other hand, a Chapter 13 bankruptcy involves a 3-5 year repayment plan in which the court allows the debtor to pay back a percentage of their overall unsecured debt. This type of personal bankruptcy is best for individuals or families with high incomes.
2. Debt Settlement
Before the negotiations begin there is typically a period where the debtor is asked to deposit money into a new savings account set up for the sole purpose of achieving the debt settlement. Many debt settlement companies do not require payment until the settlement is complete.
This is an up and coming form of debt relief that many are finding to be effective. The purpose of a debt settlement program is to negotiate the debtor’s account balances to a lower amount in an effort to eventually ‘settle’ the account altogether.
The main difference in debt settlement and bankruptcy is that the lenders are not obligated to agree to any sort of reduction in a settlement program, but a bankruptcy is a court ordered.
3. Credit Counseling
This may be the lesser known of the three options listed in this blog, but it is still effective for treating some debt situations.
In a credit counseling program, the debtor pays a financial advisor to evaluate their situation for them. In many cases, these advisors have worked in finance for 20+ years and just enjoy helping people budget.
Don’t let your debt get you down; there are options and you just need to find the right one for you! If you know friends or family who has gone through any of these three options then ask what they thought of how it helped them get out of debt.
The great thing about all three of these options is that because they are all so popular you can find information on them online, in books, or in magazines anywhere. In fact, many bankruptcy attorneys, debt settlement firms, and credit counseling companies even offer free initial consultations. Another option to get out of debt is payday loan consolidation and how to deal with it