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Struggling with debt? Understand that you are not the only one going through this tough time. There are thousands of other people going through same situation. Just relax and get help! Countless options are available for you to get the needed relief.
Everyone’s financial situation is different so the first step is analyzing all options and deciding, which is the best suited option based on your financial crisis and circumstances. All of the five options discussed below will lead you to a debt free life. However, they will come with certain risks and effects on your credit report and finances so choose the right option with caution.
Monthly Minimum Payment:
The best of the debt relief solutions is the least complicated method and thus we are discussing it first. This involves an organized way of paying your debt on a monthly basis. This means by paying your minimum monthly amount against your debt will help you avoid any late payment penalties as well as other service charges and burdening interest on the overdue minimum amounts. By paying your minimum monthly amount, you will also work towards improving your credit rating. Paying only the minimum amount will however take very long before you are out of your debt but it will be the first step towards a debt free life, as long as you are not consuming the available limits after paying off once. If you can manage to pay more than the minimum payment on your debt, it will help you pay off the total debt sooner, resulting in less interest cost and better credit report.
Debt Consolidation:
The second recommended option is through the debt consolidation loans. By going with this option, you will pay off all your existing debts after getting a new loan at a lower interest rate. The debt consolidating loan can be in a form of loan with a lien on your property or your house. Using this option, you can focus on managing only one debt instead of multiple debt interests and payments at different rates with different payment dates. Moreover, you will be more focused on paying your monthly payments because your property ownership will be at risk, in case of non-payment or delays. Your credit report will be affected with this new loan, which will be repaired easily once you pay off all other existing debts.
Debt Settlement:
The third of the debt relief solutions is the debt settlement, which we can also call as the final settlement with the financial institutions after negotiation using a debt settlement agency. You should only opt for this if you are unable to pay your minimum monthly payment towards your debt. This is a tricky option and requires having a good debt settlement agent or debt relief company by your side. The debt settlement agent will carefully review your financial capabilities before taking up your case with any financial institution. The debt settlement process is a lengthy option where the financial institution takes you to the court after you are unable to make minimum monthly payments against your outstanding debt for at least a few months. Once in the court, your debt settlement agent will defend your situation with your lack of financial strength in paying in the full amount and a better negotiation by your agent will lead to a lower total payment against your debt.
Debt Management:
Debt management option is one of the very sought after debt relief solutions, in which you work with a debt management company that helps you not only to become debt free but also provides the counseling for managing your carefree spending habits. This option is very similar to the debt settlement option with the only difference of not getting any advice or counseling for managing your finances and spending with your debt settlement agent. The debt management company, just like the debt settlement agent, will negotiate better interest rates and total outstanding on your debts. The debt management company will consolidate your debt and pay on your behalf, which you will be paying to the debt management company. Working with a debt management company will have a negative impact on your credit report, which you should not be surprised about.
Bankruptcy:
The last and least favorable option is filing for the bankruptcy. This option is rarely recommended by any financial advisor or any debt management company because it puts you in a danger of losing your assets. When you are filing for bankruptcy, a bankruptcy court evaluates the current situation of all liabilities and puts your assets for auction so that your liabilities and creditors can be paid off by using whatever liquid or fixed assets you have in your ownership. When you are filing for bankruptcy, it leaves your credit report in a very bad situation where getting any new credit line becomes difficult. During bankruptcy, the court may also decide to waive off any remaining liabilities if your assets are unable to pay for all your existing debts.
Author Bio:
Steven Rooyen is a husband, father, senior debt advisor and a financial consultant at Sort My Debt. With over a decade of experience in different financial fields, Steven has provided debt relief in Australia and helped people resolve their debt problems without applying for bankruptcy. While not doing that, you can find him reading books and hanging out with friends.g books and hanging out with friends.
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