When you have a lot of debt and can't pay your regular bills on time or even at all, you may find yourself in a very stressful situation. Even worse, other lenders won't give you credit because you can't pay back the credit you already have. If that wasn't bad enough, you'll also get letters and phone calls from your creditors who will be rude, angry, and even threaten you if you don't pay them what you owe.
Your bills go up as these problems get worse. The problem with many consumer debts and unsecured loans is that the interest rates are so high that even if you make your minimum monthly payments, you probably won't be able to pay off your debts. As if the interest wasn't bad enough, if you fall behind on your payments or borrow more than your credit card limit allows, you may have to pay a lot of other fees, like late payment and over the limit fees.
When you find yourself in one of these situations, you need debt relief or ways to get your debt under control so that you can get rid of your debts for good. Before you look into debt relief options, keep in mind that you didn't get into debt in a few days or weeks, so you shouldn't expect to get out of debt in a few days or weeks either. Any way you choose to get out of debt will take time, patience, and careful financial planning to work.
First, what to do:
There are many ways to get help with debt. Before you start, you will need to sit down and write down all of your debts. You should also write down the name, phone number, and interest rate of each creditor. You will also need to figure out how much money you get each week and where it goes. Set up a budget for yourself and stick to it while you search for options that will work better for you and help you get out of debt.
Find out which of your debts have the highest interest rates and pay off those first. They are the ones that cause you the most stress, so the sooner you pay them off, the closer you will be to getting out of debt. Pay the bare minimum on all of your other debts, but pay as much as you can on the debt at the top of your list.
Next, you need to call each of your creditors and tell them what's going on. Tell them the truth. Ask if you can pay off your debt for less money or if they will lower your interest rates while you are paying off your debts. Ask your creditors how you can pay off your debts together. You might be surprised by how willing they are to help you pay back your debts.
You might want to use a credit counselling service to help you get out of debt if you don't feel comfortable talking to your creditors or if you aren't getting very far with them. A credit counsellor will work with you and your creditors to get your interest rates lowered and your monthly payments made easier to handle. A credit counselling service will also teach you how to stick to a budget. Some credit counselling companies let their clients pay them money every month and have their debts paid on time by the credit counselling company.
What's your choice?
People often think that going bankrupt is the best way to deal with having too many bills. Most likely, this is the worst thing you can do. If you declare bankruptcy, you may still have to pay back some of your debts. You will also have a very bad credit report, which will make it hard for you to get credit in the future. Even if you can get credit after filing for bankruptcy, you will have to pay a lot of interest, which will put you right back where you started. So, even though bankruptcy may seem like an option, you should only do it as a last resort, and even then you should be careful.
Debt consolidation would have to be one of the best ways to get some money help. Basically, a debt consolidation loan will pay off all of the debts you already have and roll them into one, usually with lower interest rates and lower monthly payments. There are loan companies that will give you money without asking for collateral. The interest rates will be higher than those on a secured loan, but they will be much lower than those on credit cards or loans from other companies.
If you already own your own home, you might also want to think about a home-refinance, which is also called a home equity loan and can be used for many things, like paying off your debts. You might be able to get a lower interest rate on your home loan and pay off your debts if you refinance. If you take out the refinanced loan over a longer period of time, your monthly payments will be less, which will help you get out of debt right away.
Debt relief is important if you want to get out of the debt you already have, but you should also learn how to budget your money and handle it better in the future. You don't want to keep going into and out of debt over and over again.
