Methods to Get Rid of Debt Fast
Debt has become an inescapable part of life. It is easy to accumulate enough debt that you feel like you will never get out from under it.
Getting rid of it can seem like a monumental task that you don’t know how to do, or where to start. Fortunately, there are professionals who find ways to help get rid of debt in several different ways.
DEBT CONSOLIDATION
The idea of debt consolidation is to combine all of your monthly payments into a single monthly payment. Debt consolidation can be used for credit cards as well as loans.
Having one payment is likely to be less expensive on a month to month basis and can make you feel less overwhelmed by accumulated debt. There are three main options for consolidating debt.
* DEBT CONSOLIDATION LOANS
DEBT CONSOLIDATION LOANS are the first thing that most people think of when they think about debt consolidation. These types of loans cover all of your existing debts and make them into one payment.
There are risks with this method as there are many scam artists out there and the interest rates that are offered are often only introductory rates, meaning that the amount of interest might jump higher after the trial period has ended.
It is best to get the help of a reliable professional before signing anything to make sure that you are getting the best and most legitimate deal possible.
* HOME EQUITY LOANS
HOME EQUITY LOANS use the equity in your home in one of two ways. The first way is a home equity loan. A lender will advance you a lump sum that you can use to pay your existing debt.
You will then make monthly payments on the lump sum that was borrowed. A home equity line of credit is also an option.
You borrow against the equity in your home in exactly the same way that you would use a credit card, only using what you need when you need it. You make monthly payments based on the amount you borrowed.
* CREDIT CARD BALANCE TRANSFERS
CREDIT CARD BALANCE TRANSFERS involve putting all of your debts onto a single credit card. Many companies offer low-interest rates for a limited time to make this easier.
The interest rate will go up after the introductory period is over. While this method can be useful your ability to qualify to get a credit card to use this way will depend on your credit score.
DEBT RELIEF
Also known as debt settlement, can help relieve the pressure created by debt for many people. However, a debt settlement can be a bit unreliable.
To pursue this option, you will need to go through a debt settlement company. These companies will negotiate with your creditors on your behalf.
They do charge a fee for their services that generally starts after an agreement with one or all of your creditors has been reached. The reason this can be a risky way to get rid of your debt is that not all of your lenders will work with the debt settlement company.
Even if your enders will work with the debt settlement company, it is not always possible to reach an agreement. The debt settlement company will usually suggest that you stop paying on all of your debts until an agreement is reached.
However, if they can’t reach an agreement with a lender, then you’ll have backed payments and fees to deal with.
PERSONAL BANKRUPTCY
PERSONAL BANKRUPTCY is usually used as a last-ditch solution when no other method of getting rid of debt has worked. There are two kinds of personal bankruptcy.
* CHAPTER 7 bankruptcy requires that you liquidate everything that you own, such as a house or a car so that it can be used to pay off as much of your accumulated debt as possible.
Certain types of property are exempt under federal law, but most of what you have will be put towards your existing debt.
* CHAPTER 13 Bankruptcy is a little bit different. In a chapter 7 bankruptcy, everything is liquidated. In a chapter 13 bankruptcy, it is possible to keep property such as houses and cars.
To qualify to file a chapter 13 bankruptcy you need to have a steady income.
Bankruptcies are complicated and a lawyer will be necessary when pursuing this option. No matter which kind of bankruptcy is filed, a record of it will stay on your credit information and scores for 10 years.
While this solution to debt can help give you a clean slate to start over, it can seriously affect your ability to buy a home or do anything else that requires a credit check.
