Debt help is readily available, as long as you know where to look for assistance.
Debt happens to many Americans, due to expensive necessary purchases and limited income opportunities in many areas of the country. Due to this, many need to borrow money just to get by, while the cost of living continues to exceed their capacity to pay back borrowed funds. If you need debt help, you are not alone.
If you find yourself in debt due to borrowing more than you are able to pay back right now, then you need to investigate your options for assistance. There are many ways to start alleviating your debt now, while others are longer-term options that can help you over time. Depending on your needs and your financial capacity, you will need to find the best options for you to move forward despite your debt. Wherever your debt stems from, you need to address it and start whittling away at those problems as soon as possible.
Types of Debt
While the idea of being in debt never sounds ideal, it is still important to remember that debt can vary based on needs and financial capacity. For example, taking out a loan for a house means that you will technically be in debt for decades to come until you are able to repay the entire loan and interest. This is different from other forms of debt, which might result from poor financial decisions like shopping for unnecessary items or traveling when you do not have the funds for such trips.
Similarly, student debt can feel like such a burden, but the investment you have made in your future by getting a higher education is well worth the initial loan. In both cases, however, repaying the loans as quickly as possible usually means paying less interest over time. This can greatly benefit you, as the longer the term of the loan, usually the more interest you will have to pay on top of the original loan amount.
Debt help is available as long as you know where to look for assistance and how to best utilize the tools available to you. Getting out of debt quickly is ideal, but always be careful with any offers that seem too good to be true. Any individual or company offering immediate and complete debt relief is likely just shifting your debt from another company to themselves. This could result in even worse repayment terms, so always be cautious with these types of offers.
There are valid opportunities to shift your debt from one lender to another, however. For example, if you have multiple credit cards, one might have a lower interest rate than another. Shifting your balance from the higher interest rate company to the lower interest rate company can help you save money as you slowly pay down that debt.
If you are considering transferring a balance from one company to another company you have not worked with before, be incredibly cautious and thorough in reviewing the terms and conditions of this new company. Fees can be very high at these third-party companies, which can make your debt even worse in the long-term.
Paying down your debt over time is, generally, the best solution to avoid additional fees and other lenders becoming involved. Since many borrowers who find themselves in debt do so after an emergency, you should try to avoid increasing your debt as you pay off the emergency bills. If you find yourself in debt due to poor financial habits, then you need to first address those before you will find any success in paying down your debt.
If you simply cannot meet your financial obligations, then you can look into the more drastic options that require more immediate relief.
Credit counseling is a helpful first step to reducing your debt problems. If you have borrowed more than you can repay right now, then you can look into counseling opportunities at a nonprofit agency offering this type of assistance. You will be able to review the debt, your budget and your income, plus any other factors that might affect your ability to pay back this debt.
Credit counseling is an excellent step to take. In fact, it might be the only step you require if you are persistent and able to meet your financial obligations according to the plan outlined by the agency.
Managing Your Debt
Managing your debt, ideally with the assistance offered by a credit counselor, means taking a variety of steps to lower your interest rates and to find the best solution to paying down all of your debt. The first step often recommended is finding the lowest interest rate where you could transfer your debt balance.
This might be a lending institution you already use or it might mean another company altogether. Just be careful to read all of the fine print to ensure these lower interest rates will enable you to fully repay your debt and you will not, instead, end up with a dramatically higher interest rate after a certain period of time. Managing your debt through transfers and lower interest options can be a great solution to get you started on the right path.
Depending on your situation, declaring bankruptcy actually might be your best solution for dealing with your debt. If you qualify for this status, then you might want to consider it a viable option before considering debt consolidation or resettlement. Declaring bankruptcy can alleviate your debt problems quickly, but this will not affect every type of debt. Additionally, declaring bankruptcy can have a dramatically negative impact on your credit score, which can impact your future options for employment or for renting a home, among other problems.
Debt Consolidation and Debt Settlement
Debt consolidation can help you to combine all of your qualifying debt into a single account, which can be more manageable in terms of minimum monthly payments and interest rates. Always be careful when consolidating your debt in case there are low rates now that are scheduled to increase eventually. Also note if there are balance transfer fees and how you might able to minimize these extra costs.
Debt settlement, on the other hand, is considered to be a final option for many who find themselves in debt. To use this option, a third party company will put your payments into a settlement company account, which will then be used as leverage against your lenders to try to get you out of needing to pay the full amount you owe. This process has a very negative impact on your credit score and you might still need to repay your loans in full, plus late fees and increased interest rates. This is very risky and should only be used if you know how the process works and how you can best benefit from it.