Debt is a fact of life in America, making debt relief a national obsession. A search for “debt relief” on Google pulls up over 34 million pages; on Yahoo and Bing, the total is over 12 million pages. Here are 6 simple tactics to help you avoid bankruptcy.
The average American household has $9,300 of credit card debt, but the share of income going to lower credit card debt has fallen to 0.3 percent.
The increase in personal debt can’t all be blamed on overspending. After adjusting for inflation, wages have been flat for the past few years while the cost of essential goods and services like housing, food, medical care, and transportation have risen.
The debt of the typical American family earning about $45,000 a year rose 33.1 percent, after adjusting for inflation.
Housing debt has climbed notably because home prices have risen and people have borrowed against the equity in their homes.
This refinancing trend is one of the main strategies for debt relief. It takes several forms: first mortgage refinancing, second mortgages, debt consolidation loans, and home equity lines of credit.
These mortgages can be either fixed-interest or adjustable-interest loans.
Many websites keep abreast of current interest rates and offer a free mortgage refinancing application that matches potential borrowers with the best loans based on factors like credit history, FICO score, type of mortgage, and size of the loan.
In this debt-ridden society, many people are in severe financial difficulties.
While bankruptcy is the last step in a long road of financial pressures for many, others opt for this solution too early, sometimes without considering suitable bankruptcy alternatives.
If you currently have unbearable debts and thinking of wipe it off from your statement by declaring bankruptcy; Just put your decision on hold for a while, there may be other options available to help you avoid bankruptcy.
Try to improve your situation before you implement the bankruptcy option. First, try to reduce your debt by following the steps contained in the Debt Destroyer guide.
No matter which way you go, evaluate the 5 steps below to see if you could avoid taking that drastic step.
1. Detail out all your debts
First, look at all your secured debts such as mortgage and car loans. How much is the repayment for each month? What are the interest rates?
Then, list down all the fixed expenses such as power, phone, insurance, food, etc. What are the total costs for these expenses?
Follow by examining your credit card debts. Take out all your credit card statement and write down the amount you owe for each card and their interest rate.
Finally, write down all your other expandable; these are your optional expenses such as entertainment, gym, membership, dinners at the restaurant, and other impulsive purchases.
2. Eliminate the unnecessary expenses
Now you should have a better idea of where your money goes; Make a diet plan on your cash; In your Cash Diet Plan, list down all your savings from the elimination of the optional expenses.
You will be surprised how much money you can save by carefully control your expenses. The money you saved can be used to pay down your debts.
3. Get your family involved and work as a team
Don’t do it alone because, under such a stress condition, you may out of control and may not think and plan in a clear mind. Get your family together and let them know your financial problem and have them work together to follow Household Budgeting to eliminate unnecessary expenses.
4. Cash out with your assets
If you have equity, you are in a better situation because you could refinance or get a secured loan to pay off your debts. If you are looking for bankruptcy as your debt-relief options, you may not have any equity in hand already.
But equity is not the only asset; many people tend to forget that things that have cash value, but not sentimental value. Think antiques, old clothes, or collectibles.
List down all the assets you own which you can sell and cash out. Check the closets, garage, and storage locker, she says, “and find out what you can live without”.
Then, cash them out through garage sales, eBay, or consignment shops. Use the money to pay down your debts as much as possible.
5. Go for consumer counseling service
Arrange an appointment with a credit counseling agency and let the counselor understand your financial situation and draft a budget for you.
Review the debt management plan proposed to you before your sign to enroll in the plan. You may get a few plans from other credit counseling agencies for comparison.
Choose the one that best suits your current financial needs. Although a debt management plan can have a negative impact on your credit, it's better than bankruptcy.
6. Get A second or part-time job
Utilize your out-of-work time on a second or part-time job. Although you may not earn much in your part-time job, a little money coming in can keep a bad financial situation from getting worse.
On the other hand, if it is too late for these tactics to help you avoid bankruptcy.
There are still several options available for you if you are in debt and do not wish to declare bankruptcy. The most sought-after option is following the tactics contained in Debt Consolidation Strategies.
Debt consolidation is where you take a new unsecured loan and use the funds to pay off your outstanding debts.
An unsecured debt consolidation loan will help you consolidate all your unsecured debt and avoid bankruptcy. This new money can save you hundreds of dollars per month if you choose to use your loan to pay off existing debt – especially high rate credit cards.
Even if you don’t own a home, you could qualify for their debt consolidation loan.
Debt consolidation loans are repayable over a longer-term at a relatively low-interest rate. This means that the monthly repayments are lower. If the loan is secured on your property then the interest rate and payments may be even lower.
But you must compare the pros and of debt consolidation loans before taking the plunge. There are two options for consolidating debts – either you borrow money to pay off all your debts or seek assistance from a debt consolidation service.
The decision on which option will meet your needs has a lot to do with whether you can qualify for low mortgage rates on debt consolidation loans and the total amount of debt you need to consolidate.
Borrowing for debt consolidation immediately eliminates multiple debt payments.
All debt collection actions eliminated. Most importantly, it won’t impact your credit rating; in fact, it may help improve your credit rating.
Seeking debt consolidation services immediately decreases your monthly payments. It also brings to a stop, and in some cases, eliminates some interest and fees.
By getting this loan and using it to pay off credit cards, you’ll pay much less interest. Once you’ve paid off your credit cards or other debt, you’ll have a fresh start with your finances and can set up a budget within which you can live comfortably without ever having to run up credit card debt again.
Debt consolidation is an excellent tool that can help you manage and decrease your debt when you just can’t seem to do it on your own. There is no way that you can completely fix bad credit without the ability to reduce debt and pay your bills on time.
However, once your debt has reached a certain level, this can seem almost impossible to accomplish.
A credit counselor can provide you with the option of enrolling in a debt management plan, which provides immediate relief and allows repayment of debts without the high fees and negative ramifications of bankruptcy.
Getting out of debt can be a long, drawn-out process. If you spent years wrestling with financial problems, the solution will not come to you overnight. It can take months, even years to unravel debt difficulties but it can be done.
You have some viable solutions to help you reduce your debt. Learn all you can about each option and select the plan that is right for you.
- Household Budgeting: Will show you how to stick to your budget. So, soon you will have a monthly surplus, and you will see your savings start to grow.
- Debt Consolidation Strategies: When it comes to debt consolidation, you need to practice techniques that are a little unique and very much focused on getting you out of debt within a stipulated period of time.
- Debt Destroyer: Finally you can fully equip yourself with these “must-have” tools for busting debt and live a life without having to worry about debt collectors!