When you’re in debt, it can seem like you’ll never get out. In the case of high interest loans, it’s possible to make multiple payments without ever really paying off more than the interest, making finding good financial debt solutions difficult. Fortunately, there are ways to get out of debt.
One of the most popular financial debt solutions is combining multiple loans into a single loan. By giving this loan a lower interest rate than the smaller loans, it’s possible for a person to pay less in interest every month. Debt consolidation also allows a person to keep up with just one bill instead of many.
This financial solution allows a debtor to negotiate with the companies he or she owes money to. Often, debt settlement companies are willing to reduce the total amount owed and/or make changes to the interest rate. It’s also possible to extend payments in order to pay less every month.
It can be hard to take care of all the bills that come in each month. Debt management allows a person to turn over their debts to a professional manager. This professional is then able to pay the bills, and can also negotiate with creditors for better rates or payment terms.
There are many services that offer to monitor a consumer’s credit report. For someone who is trying to repair their credit, this is a very valuable service. Credit monitoring allows a consumer to watch for any fraud on their account as well as see the results of their financial decisions.
Negotiate with the Creditors
Simply calling the companies that a consumer owes money to and asking for better terms can get an individual farther than they might think. While individual consumers do not have the relationships that professional credit counselors might have, it’s still possible to get a reduction in interest rate or extended payment terms.
Cut Back on Expenses
While this may not be the easiest way to cut back on debt, it is often the most effective. Consumers should scour through their budget and make as many cuts as possible. Remember that these cuts are temporary, and often after a few months of living with them, it is possible to pay off enough debt to start spending again.
People who have a lot of debt due to one or a couple of large purchases might want to consider volunteering to give the item back to the bank in order to have the balance of their debt forgiven. Typically this is done with purchases such as automobiles or boats, but some people have had success using this method to return furniture. Consumers who choose this method should consider if there is another way to pay off the debt, and then make very careful arrangements with their bank to return the item.
This is a way to get out of a home or other property that a homeowner is currently underwater on. In the event that a consumer owes more on a piece of real estate than it could currently sell for, then short sale might be a good option. This method requires a consumer to make a deal with their bank in which the bank agrees to accept the amount of money that a home sells for in lieu of forcing a homeowner to go through foreclosure.
When debts just become too overwhelming to pay, there is a way to get rid of them. Filing bankruptcy is a major decision, and one that should usually only be taken after trying everything else. Consult with a bankruptcy attorney to determine if this is a good course of action.
A credit counselor is able to review a client’s entire financial situation and make recommendations that are personalized to their specific situation. A counselor can suggest ways to cut back expenses, make extra money, and/or go through one or more of the other financial debt solutions described here.