Being up to your neck in debt can be overwhelming. You might not know where to turn, or who to ask for advice. Worse, there are plenty of people out there just waiting to take advantage of someone desperate to get out of debt. However, there are things you can do to resolve the situation safely.
Here’s what you need to know when choosing a debt relief option.
Try Some At-Home Remedies
When you’re deep in debt and need to do something about it, there are a few approaches you can try on your own. One of the pros to this approach is you’re not going to have to pay anyone for services. The downside, however, is you’re going to be working through something you likely have never dealt with before. Meanwhile, a debt professional has likely seen your exact situation countless times.
Still, these DIY options are worth considering:
- Credit Counseling:Talking to a free advisor about what you should do in your financial situation is the smartest way to start. Credit counseling organizations are typically non-profits aimed at helping consumers deal with financial obligations. They’ll help you create a budget, get your credit report, and they can also help you create a debt management plan.
- Contacting Lenders: If a debt management plan doesn’t sound just right to you, it’s also possible to contact your lenders yourself to negotiate better terms. Often, they’ll be willing to work with you if you’re reasonable.
- Balance Transfer: Another at-home approach is to do a credit card balance transfer. This is where you move the balances from your existing credit card accounts onto a new one with a low introductory rate. It’s important to do what you can to pay down that balance with no interest, as you can actually make your debt worse otherwise. There are also fees for doing a balance transfer.
Consolidation Loan
Debt management plans and balance transfers are consolidation loans in their own way. The idea behind a consolidation loan is you’re taking multiple existing accounts and rolling them into a single new one with a lower interest rate. This is typically effective for credit card consolidation because these are unsecured loans. Lenders will be willing to negotiate to get paid something since there’s no collateral on the loan.
Debt Settlement
Debt settlement is another form of debt relief that can help you if you’re stuck with your finances. Debt settlement is where an agreed upon payment is offered to lenders in exchange for settling a debt. It’s important to know that even though debt settlement can be effective, it’s not guaranteed.
Bankruptcy
Bankruptcy is usually considered the last option you should contemplate. Still, there were just over 740,000 non-business bankruptcy filings last year. While bankruptcy is more common than many realize, it’s not something you want to experience. Bankruptcy often leads to you having to liquidate many of your assets. It will also wreck your credit—making it difficult to borrow money for years to come.
On the other hand, there are times when bankruptcy is simply inevitable.
It’s tough to be in a spot where debt is running your life. The thought of it just finds its way into otherwise enjoyable situations. Taking care of debt through some form of debt relief can free your mind of this burden.