What to Do if You're In Over Your Head In Debt
Some people find themselves with way to much credit card debt and not enough income to bring the balances down. What can be done? Here are some suggestions.
*It may be time search for additional employment. You need to increase your income. Try taking on a second job or maybe you can try to look for a higher paying job. Just be sure that the extra money you make is used to pay off the debt to you have accumulated. This can really lighten the strain on your budget.
* Attempt to negotiate with your creditors. If you talk to your creditors, some of them may be willing to give you more time to pay, drop late fees, or reduce your interest and your minimum payment. It's possible that they might even settle for a lower amount than you actually owe, although it's rare to achieve this without a lawyer.
*Debt consolidation can make debt more manageable. If you are a homeowner consider a home equity loan to turn your multiple payments into one payment with lower interest. Remember, though, that this is a serious decision to be thought out carefully because this loan will be secured by your home.
Also don't get too excited about that low interest rate for your debt consolidation. Remember this loan will have a longer term so you may end up paying more interest in the long run. Try paying more than the required amount to pay it out as quickly as possible.
If you do not want to put your home at risk you might try applying for a new credit card with a high limit and low rate. Then you can transfer the balances of your cards to this one card and reduce your monthly expenditures.
Once you have consolidated your debt you have to be careful not to begin charging things again and run the credit card balances back up. You will be in worse shape than you were in the beginning.
* File for Bankruptcy. This should be your last resort. Chapter 7 bankruptcy wipes all of your debts clean, but you may lose some of your property depending on your individual circumstances. Chapter 13, which is now more common because of changes in the law, sets up a court-ordered payment plan to pay off your debt. Either type will stay on your credit report for 7 years, and on public record permanently.
*It may be time search for additional employment. You need to increase your income. Try taking on a second job or maybe you can try to look for a higher paying job. Just be sure that the extra money you make is used to pay off the debt to you have accumulated. This can really lighten the strain on your budget.
* Attempt to negotiate with your creditors. If you talk to your creditors, some of them may be willing to give you more time to pay, drop late fees, or reduce your interest and your minimum payment. It's possible that they might even settle for a lower amount than you actually owe, although it's rare to achieve this without a lawyer.
*Debt consolidation can make debt more manageable. If you are a homeowner consider a home equity loan to turn your multiple payments into one payment with lower interest. Remember, though, that this is a serious decision to be thought out carefully because this loan will be secured by your home.
Also don't get too excited about that low interest rate for your debt consolidation. Remember this loan will have a longer term so you may end up paying more interest in the long run. Try paying more than the required amount to pay it out as quickly as possible.
If you do not want to put your home at risk you might try applying for a new credit card with a high limit and low rate. Then you can transfer the balances of your cards to this one card and reduce your monthly expenditures.
Once you have consolidated your debt you have to be careful not to begin charging things again and run the credit card balances back up. You will be in worse shape than you were in the beginning.
* File for Bankruptcy. This should be your last resort. Chapter 7 bankruptcy wipes all of your debts clean, but you may lose some of your property depending on your individual circumstances. Chapter 13, which is now more common because of changes in the law, sets up a court-ordered payment plan to pay off your debt. Either type will stay on your credit report for 7 years, and on public record permanently.
About the Author:
Are debt consolidation non profit companies the best way to consolidate your debt? Not always. Get the full story on the Inside Debt Consolidation website at http://www.insidedebtconsolidation.com
posted by Credit Counseling at
9:42 PM
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