| Which Debt Reduction Strategy Is Right For You? |
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delbosque8
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| Which Debt Reduction Strategy Is Right For You? |
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Getting into debt these days has become very easy. Credit card companies bombard us with offers in our mailbox, ads on TV, promotions in stores. If you can sign your name, it seems like you can get credit.
But what happens when you use so much credit that you can no longer pay your credit card bills every month?
And what happens when no matter how much you pay, your bills get bigger...and bigger...and bigger?
There are several strategies for getting out of debt.
All of them have their good points. And all of them have their bad points. Which one is right for you? Here is an overview of the different debt reduction options available to you:
Borrowing money from friends or relatives:
If you have a friend or relative who has enough money to help you get out of debt, consider yourself lucky. But think long and hard - and then think again - before choosing this option. While borrowing from a friend or relative can help you avoid the high cost of interest (if they are willing to give you the money without asking you to pay interest), borrowing money can hurt, or even ruin, your relationship. Everybody wants to pay back their "rich uncle" - but what happens if you don't? Or you can't? This can put both of you in an uncomfortable position. Even if the money is a gift, it can change your relationship entirely. So make sure to give this option a lot of thought before borrowing money from a friend or relative.
Credit counseling:
For many people, credit counseling is a good option. After all, inmost cases you can lower your interest rate, lower your monthly payment, and combine your credit card bills into a single payment. But be careful. There are LOTS of "non profit credit counseling" companies out there. And not all are created equal (and not all do what they say they will do). Before signing any paperwork, it is a good idea to ask lots of questions. And compares the fees and other program details. Just because a business is non-profit doesn't mean there aren't costs to you - and doesn't mean you don't need to shop around and compare programs!
Debt consolidation loan:
If you are fortunate enough to own a home (and you have enough equity to borrow money from your home's value), a debt consolidation loan may be the way to go. In many cases, your interest may be tax deductible (but check with a tax professional first to make sure). And also think carefully about this option - because if you borrow "against" your home, and you cannot make the payments for whatever reason, you may risk losing your home! Fees, interest rates, and terms vary, so make sure to shop around for the best loan program for you!
Debt settlement:
If bankruptcy seems like the only option, then debt settlement (also called debt negotiation) may be a good alternative. The process of settling your credit card bills (paying them off for less than you owe) is a more aggressive approach to getting out of debt. But if you are behind in your payments, this can be a less drastic step than declaring bankruptcy. You will pay income taxes on the amount you save, but this amount is usually still much less than the amount you would have paid in interest. Before deciding on debt settlement, make sure you feel comfortable with such an aggressive strategy - and once again, shop around and compare terms and fees.
Bankruptcy:
Typically, bankruptcy is the last alternative. And with the new bankruptcy laws put into place in October 2005, you should consult with a bankruptcy attorney before considering this option. With good reason (for the most part), having your debts "written off" through bankruptcy has become more difficult. So, find a good lawyer, and discuss your options carefully.
Now, which of these debt reduction strategies is right for you?
There is no simple answer. The best advice is to check out all your options - very carefully - before deciding which strategy is best for you. Before signing up with any company:
* Ask lots of questions so you are comfortable with the company
* Learn how the process works, find out the fees, and get ALL agreements in writing
* Check with the Better Business Bureau to see if there are any unresolved complaints
And while being in debt is certainly very stressful, always remember that life is not entirely about money. Life is about making the most of each day, and being thankful for the things that you do have - while you are working on fixing the things you don't!
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Tue Jun 01, 2010 5:14 pm |
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C9Consulting
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With debt reduction...I've always heard/read that credit and debt counseling services, only do what the common consumer is afraid to do. Which is stuff like repeatedly hound the collections agency for a better deal, lower payment, or full settlement. Is this true?
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Tue Jun 01, 2010 5:45 pm |
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Allan Henry
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| Debt Reduction People Can Consider Bankruptcy. |
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As more and more struggle with their finances in today’s tough economy, it seems to be even more difficult to find good help in handling the financial difficulties you encounter. There are many lawyers who advertise help in filing bankruptcy but is bankruptcy the only way to go? Is it the best option in your situation? If you speak to a bankruptcy attorney, he will more than likely tell you bankruptcy is your best choice., He tells you this because filing bankruptcies are how he makes his money. But what if there was an option that would allow you to avoid bankruptcy? Wouldn’t that be a better alternative?
Some see that bankruptcy is their best alternative, whether it is Chapter 7 or Chapter 13, but it is not always the best answer for everyone. There are many downsides to filing for bankruptcy. One of the main negatives is that when you file for bankruptcy you lose much control of how your finances will be handled. Depending on which bankruptcy chapter you file, assets can be sold and you have no choice in the matter. In addition, if you are put on a payment plan with a trustee for your bankruptcy, there are no exemptions. Illnesses, losing a job or anything else will not matter to them. There is no way to change the payment plan once it is set up. This can be difficult in times where things change rapidly and can be a key reason why many seek options with bankruptcy avoidance.
There are many types of credit counselors, debt settlement and other types of agencies that offer help while employing bankruptcy avoidance measures. But, can these truly give you relief from your creditors while protecting your assets? Generally, most cannot do this which makes it necessary for those who are looking for help to seek other solutions.
The best way to avoid bankruptcy is to find a debt consultant who can help you decrease your debt balances, help you protect your assets, avoid legal actions and eliminate monthly payments while allowing you to stay in control of the situation. When you are looking for help with your debts, it is important to find a company who can help you use the law to protect your income and assets while helping you negotiate with your creditors and come up with ways to lower your debts. By doing this you will be able to retain control of your finances while making sure you are not further exposed to unnecessary risks.
For more information on how to eliminate debt automatically and save thousands of hours of time and money, go to: http://www.freedomfromcreditors.com
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Tue Mar 01, 2011 7:34 pm |
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MrPolarZero
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The thing is, the strategy that you will most likely use would depend on the situation. In many cases, you would not want to go through the complicated bank processes, so you will likely opt to simply borrow from family or friends.
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Wed Mar 02, 2011 5:14 am |
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cccfree
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you might want to check out credit counseling to take care for your debts.
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Tue May 10, 2011 10:51 pm |
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Ba11le
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Location: China
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Thanks For sharing information.Debt Reduction is a comprehensive E-book about referral marketing.it's very informative .Thanks again.
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Tue May 17, 2011 9:08 am |
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elissakay
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Joined: 23 May 2011
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Thanks for this strategy. It was helpful. But I think strategy changes according to the individual. You can keep track of these things.
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Tue May 24, 2011 9:37 am |
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