How to Get Out of Debt with Debt Settlement

How To Remove Debt

Dealing with debt is never a good thing. When you are buried under a pile of debt, you commonly find yourself doing little more than making payments on the interest and never actually addressing the principal. Rather than continue to see your finances suffer from year to year, you are well advised to look into reliable debt relief options.

One of the most tried and true methods of debt relief is to simply procure a consolidation loan. To the uninitiated, borrowing money to pay down borrowed money seems like an odd strategy. It isn’t as long as you are procuring a new loan with a lower interest rate. Paying 19% interest on three credit cards is nightmarish. Moving the total balance of the debt to a single loan with 8% interest is a far better plan. Taking out a home equity loan could be wise since the interest rate will be even lower. The low rate is a result of the loan being secured by the property.

Unfortunately, not everyone’s credit is good enough to be approved for a new loan. In fact, the person’s finances could be so bad that he/she has missed scores of payments on all the various debts.

Such a scenario is not good, but it does not mean there are no options available.

Negotiating a debt settlement may prove to be a viable strategy. In a debt settlement, an agreement is made to pay off a portion of the debt with the remaining balance being forgiven. Usually, a lender will agree to terms of this nature when it becomes obvious the person who is in debt is clearly in danger of totally defaulting.

As for bankruptcy, a chapter 7 filing is often the only way the heavily indebted are able to clear out all that they owe. Chapter 7 is liquidation bankruptcy and it entails seeking the help of the courts to forgive certain debts and also liquidating remaining assets to pay off the remaining balances. Chapter 7 provides the severely financially troubled with a fresh start. As long as the person who takes advantage of chapter 7 bankruptcy does not return to old spending and borrowing habits, a fresh start very well will be achieved.

Removing debt is not likely to occur overnight, but taking steps to get rid of the debt is better than doing nothing and suffering from constant financial woes.

Get Out Of Debt Fast With The Proper Plan

For many people, it can be difficult to have control over their finances due to debt that has been acquired over several years. Some people may feel overwhelmed and can find it difficult to see an end in sight with the debt that they owe. To repay lenders in a short timeframe and find relief fast, there are a few steps to take when creating a plan that is realistic and manageable.

  1. Create a Timeline. To get out of debt in a short period of time without paying more in interest rates over several years, it’s important to create a realistic timeline. Create a budget with the amount of money that you can repay each month and factor in any extra income that can also be used to reduce the debt. Having a timeline will make it easier to stay on track and will prevent splurging or unnecessary spending that can occur when managing your finances.
  2. Pay Off One Account at a Time. To gain momentum with paying off your debt, it’s important to begin focusing on one account at a time while making the minimum payments on the other accounts. When one account is completely repaid, it makes it easier to stay focused and find the motivation to repay another loan or account. Experts recommend paying off the account with the smallest amount of debt and then moving on to a second account.
  3. Cut Out Luxuries. The longer it takes to repay debt, the more you’ll end up spending in interest rates or late fees. Create a shorter timeframe by cutting out luxuries each month, which includes coffee, visits to the salon, shopping trips, and eating out. The extra money can be put towards the debt to ensure that you find financial relief sooner and have a proper plan.
  4. Consult Debt Settlement Services. Obtaining debt relief is one of the most effective ways of getting out of debt fast by having a fraction of the debt forgiven. Debt relief makes it possible for individuals to repay a portion of the debt to lenders if the amount has become too high. Many people who have a significant amount of debt are candidates for relief, which will make it possible to avoid bankruptcy. Call us today to discover your options.