“Debt relief” is a phrase that’s thrown around quite a bit. It’s used to talk about everything from budgeting your money better to filing for bankruptcy. When used loosely, debt relief refers to doing whatever you can to get yourself out of financial hot water. Some people also think of debt consolidation or negotiating with creditors as a type of debt relief. However, if you pay attention to advertisements that boast “Debt Relief Now!” they’re usually referring to bankruptcy, not methodical steps to improving your financial situation. Whatever your financial situation, there’s a debt relief option for you. Find some options for debt relief that can help you manage your debt
Options for debt relief #1: Contacting Creditors
People who need debt relief have a variety of options. One of them is to contact creditors to work out some type of deal. This is the best solution for people who know that their financial hardships are only temporary. Not being able to pay a bill right this second doesn’t mean that the money won’t be available in two weeks or one month. Creditors are often willing to work with people who’s accounts have been in pretty good standing up until recently. You may be able to get a payment extension or have your account suspended temporarily until you’re back on top of your bills. The trick is to contact your creditors early, when you know that there’s going to be a problem. Waiting until you owe five different companies months of overdue fees isn’t going to help you negotiate a deal. You want to reach out to your creditors before they contact debt collectors.
Options for debt relief #2:Debt Consolidation
Debt consolidation is another popular type of debt relief. When you work with a debt consolidation company, your debts are combined into one lump sum. Instead of paying individual creditors or debt collectors, you pay the debt consolidation company one set price until you’ve paid it off. The price you settle on won’t change as the months or years go by, so it’s easy to figure it into your budget. Debt consolidation is especially helpful if you’re paying off a big ticket item, like a car or a home, because you’ll probably score a lower interest rate. Keep in mind, though, that companies that offer debt consolidation charge a fee for their services.
Options for debt relief #3:Bankruptcy
Bankruptcy is also a form of debt relief, but one that should only be used when absolutely necessary and as a last resort. While bankruptcy will clear you of what you owe to creditors and debt collectors, it will be on your credit report for several years. If you’ve declared bankruptcy in the past, you may be limited to how many more times you can claim it in the future. There are to main types of bankruptcy to consider:
1. Chapter 7 – This type of bankruptcy takes care of your debt, but creditors are still able to take your assets. Your home or car can be seized in order to compensate for some of the debt that you owe.
2. Chapter 13 – This type of bankruptcy clears your debt and lets you maintain hold of your possessions. However, you’ll have to commit to a long-term payment plan that’s been approved by the court.
Choosing a debt relief option isn’t always easy. You may think you can handle debt consolidation when what you really need is to declare bankruptcy. On the other hand, you may think bankruptcy is the only option in actuality, you make enough to get on top of your bills. The best solution is to contact a financial professional or a lawyer’s office to discuss which options are right for you.