Are you struggling with debt? If so, it’s time to evaluate your debt relief options and choose the one that is best for you. We understand that if your bills have piled up, or creditors are incessantly calling you, you may feel overwhelmed and compelled to ignore the problem. But without a solid plan, your debt problem will not go away – it will get worse.
But first, a word of caution: there are a number of predatory companies that take advantage of people who just want to get out debt. If you plan to work with a company, attorney, or lender, we urge you to do your research. Check with the Better Business Bureau, Google them for reviews, and trust your instincts.
How to Get Out of Debt
If you are in debt, you have a few options on how to get a handle on it and ultimately be debt free. Not all options are suitable for everyone. When it comes to debt relief, your situation is unique and you’re empowered to choose the path that is right for you.
Options for getting out of debt to include:
- Creating a feasible plan to pay back your debts.
- Settling your debts.
- Debt consolidation.
- Erasing debts through bankruptcy.
Again, not all of these options are suitable for everyone. Read on to learn more about each option.
Creating a Feasible Plan to Pay Back Your Debts
This option requires dedication to creating a budget and sticking to it. To create a plan to pay back your debts, start by making a list of all of your debts and the accompanying interest rates. Then create a list of your income and all of your expenses. Include monthly expenses as well as expenses that come up annually (like car insurance). You can divide annual expenses by 12 to get a clear picture of what your monthly expenses are. Now, it is time to create a budget and stick to it. By creating a budget you are in control of your finances and you can find areas where you can trim expenses.
Once you have a feasible budget, you know exactly how much money will be left over each month to put towards paying back your debts. Generally speaking, the financial best practice is to focus on paying off debts that carry the highest interest rates first. However, if one of your debts is a small amount, you may find it helpful to pay that off first so you can feel the success of paying off a debt and be inspired to keep the forward momentum going.
If you cannot reasonably pay off your credit card or medical debts in three years, then consider the benefits of choosing another option to get out of debt.
Debt settlement is settling your debts for less than the full amount owed. Typically a debt settlement requires that the agreed upon amount be paid in full within a few days or weeks. Do you have a large sum of money to be able to pay the settlements? If not, then debt settlement is likely not the solution to your debt problem.
While debt settlement is a feasible option for some, it is important to evaluate the drawbacks of this option. For example, debt settlement may create new debt in the form of tax debts because “forgiven debt” is considered taxable income by the IRS.
If you are considering this option, read out article Is Debt Settlement Better Than Bankruptcy?
Debt consolidation comes in two forms: taking out a loan to pay off existing debts or hiring a debt consolidation company.
The first option entails taking out a new loan (sometimes called a debt consolidation loan) that will be used to pay off all of your existing debts. The idea is to streamline your payments and make only the one payment on the new loan every month. In some cases, the interest rate on the debt consolidation loan will be lower than the interest rates on the debt being paid off.
However, if you’re going to be paying off your new loan for years to come, consider the benefits of other debt relief options.
The second form of debt consolidation is to hire a debt consolidation company. They will collect a monthly fee from you and attempt to make settlement deals with your creditors. Generally, these companies are paid by taking a percentage of your monthly payment off the top. They keep the rest of the funds until there is enough in the pot to make a lump sum payment on a settlement deal, one creditor at a time. These companies are often predatory, ineffective, and leave people worse off.
Erase Debts Through Bankruptcy
Know that we are not in the business of talking people into bankruptcies they don’t need. We are in the business of helping people get out of debt and getting the fresh financial start they deserve.
If the above options will take you many years to get out of debt, we encourage you to consider the benefits and drawbacks of bankruptcy. Bankruptcy is not the solution right for everybody, but it is an option that should not be avoided out of fear or a lack of information on how bankruptcy helps people.
Bankruptcy is a powerful legal tool to end your financial struggles. Bankruptcy has the power to:
- Erase credit card debt
- Erase medical debt
- Erase most unsecured debt
- Stops harassing phone calls from creditors
- Stop wage garnishment
- Stop bank freezes and levies
- Stop lawsuits filed by creditors and other plaintiffs
- Puts an end to all collection action
- Allows you to keep most or all of your belongings, including your home and car (depending on your specific situation)
Carefully Evaluate Your Options on How to Get Out of Debt
Take an honest look at your financial situation and evaluate your options. Once you have all of the information, you’ll be able to make the decision that is best for you.
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If you have questions about your debt relief options or bankruptcy call us today at (912) 351-9000 or contact us via the web to schedule a free consultation. We are here to help you get out of debt and gain the financial freedom you deserve.
For over 30 years we have proudly served the people in Savannah, Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Springfield, Pembroke, Brooklet, Garden City, and Ludowici, Georgia.
Find out more about being debt free in our guide: All About Debt Relief
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.