Finding a debt relief program, one that will suit a debtor’s means and lifestyle, should be top priority for one who is in debt. When one incurs debt, one would desire to get out of it as soon as possible.
No one can say it often enough: Debt is a burden. A burden as heavy as a boulder being pushed vainly up a mountain. This is exactly how a good majority of debtors may feel. Possibly, you may feel the same way, too. In reality, no debt is insurmountable.
In other words, most forms of debt can be repaid. It is possible to live a debt-free life. When you find the perfect, most suitable debt relief program for you, you’ll be able to get out of debt, one step at a time. But first, we’ll walk you through your options.
What It Is: Taking out a new loan, usually a secured loan, in order to be able to repay all the outstanding debts you have, then just repaying the Debt Consolidation Loan that you’ve taken out.
Pros: Paying just one loan on a regular basis eases the stress and simplifies your life.
Cons/Risks: Falling into the hands of scammers, high loan interest rates, worse, running the risk of losing properties if they were posted as collateral for the loan.
How To Deal With The Risks: Always check the background of the debt relief program companies whose help you may want to enlist.
There’s a possibility of losing what you posted as collateral. Better make sure you will be able to pay your dues on time, to avoid losing your collateral to your creditor.
What It Is: Enlisting the help of a debt management company to pay your debts for you.
Pros: Terms and repayment rates may be renegotiated by your debt management company. You only need to pay one bill regularly, to your debt management company.
Cons/Risks: The debt management company will be taking out a fee for their services, and often, these fees are not cheap.
How To Deal With The Risks: Unless you research and can ascertain without a doubt that you’ll be working with a reputable company, postpone jumping into an arrangement that seems to be a good idea for your finances; it may turn out to be “too good to be true” in the end.
What It Is: Renegotiating the terms of debt repayment, usually for a lower total amount in favor of a lump sum. May enlist the help of a debt settlement company, or may be executed as a DIY move by the debtor.
For professional debt settlement arrangements, the debtor may be required to pay a lump sum, or a third-party account may be set up in order to allow the funds to accrue and then the debt may be paid.
Pros: Lower overall payment, debt is paid off in full, in one go.
Cons/Risks: Creditors may refuse to deal with the debt settlement companies. There’s an adverse effect on credit score for non-payment of debt, as advised by the debt settlement company. High fees. Possible tax bill on the amount written-off by the creditor.
How To Deal With The Risks: Research, read reviews and check with the Better Business Bureau before dealing with a debt settlement company. Lots of fly-by-night companies are waiting to prey on the gullible. Look for companies that only charge fees after a successful settlement…not upfront.
What It Is: Declaring oneself legally insolvent/unable to repay one’s debts. This involves legal proceedings to establish that fact legally. One’s properties may be sold to repay debt partially, or a restructuring of debt repayment may be undertaken. Pros: This gives the debtor the leverage to recover financially, since creditors will no longer be able to pursue the debtor after the bankruptcy proceedings.
Cons/Risks: Your credit rating will take a major blow. Bankruptcy will remain in credit report for 7-10 years. Having your credit rating plummet may mean: the inability to take out new loans, a setback in getting a new/better job, the inability to get a new credit card as needed.
How To Deal With The Risks: A lot of people have been able to survive bankruptcy and even emerge wealthier as they worked towards getting back in the black. Most of these needed to resort to unconventional means to start or continue their businesses, but with hard work and perseverance, people who had to declare bankruptcy were able to rise above their circumstances.
If you find yourself mired deep in debt, this is no reason to be in despair. Pull yourself together, figure out the best debt relief program to subscribe to. Strive to get out of debt the soonest. With perseverance, financial freedom is closer to achieve.
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