There are basic debt relief options that you can choose from that will help you get out of debt. These options are all effective. But there is usually a specific option that suits your unique financial situation. You have to find out what this option is so your journey towards debt relief will not be difficult.
Using the right debt relief option has a couple of benefits. The main benefit is it will be affordable. Sometimes, people have the ability to pay off their debts but the monthly plan is just too expensive. There are debt relief options that will allow you to lower your monthly payments so it will be easier to commit to. When that happens, your ability to completely pay off your debts will be more certain.
Considering the fact that there are more people with credit card debt when 2020 started compared to the previous year, a lot of people may need reminding of their options to pay off debt. And even if you did not start with debt early this year, there’s a high chance that you already have debt right now. The pandemic and the recession will make sure of that.
While things may feel and look scary right now, don’t worry. Even if it feels like your debts will get worse this year, there are basic debt relief options that you can use to make your payments easier. It’s best for you to start working on it right now so your debt will not accumulate over time. Because if it becomes too much for you to handle, you might not be able to pay everything off.
4 basic debt relief options to improve your finances
According to reports, the stimulus package and other initiatives of the government are helping people avoid defaulting on their payments. But how long will these last? How far can the government send financial help to keep people from becoming delinquent on their credit accounts?
While it’s nice to get these financial aids from the government, you need to start working on your own debts. Don’t wait for things to get worse before you get to know the basic debt relief options that you can use to pay off your debts. If you know your options it’ll be easier for you to start acting on your debts once it becomes too hard to handle.
So what are the 4 options that you have?
Repay on your own
The first of the basic debt relief options is to work on it on your own. This is your debt after all. And you are going to use your finances to pay it off. So you should have all the information that you need to find a way to pay it off.
The advantage of doing this is you can control how much you will pay. As long as you don’t go lower than the minimum amount, you can do what is comfortable based on your financial situation. And since this is all you, there’s no need to pay for any professional fees. Of course, that can also mean that the process will be longer. But if setting your own pace would make debt freedom more certain, then there’s no harm in doing it your own way.
To get started, you need to look at your debts. Make a list of everything that you owe. It is best to have a complete understanding of the problem so you can find the right solution for it.
Once you have analyzed your debts, the next thing that you should do is to find out how you can pay it all off. Look at your payment capabilities. How much can you afford to pay each month? Be honest about the amount that you can afford. If you can be detailed about how you will pay your debts, that would be better. It will allow you to make concrete plans about getting out of debt. It allows you to really look at the hindrances that might become a problem as you pay off your debts
Get help from a professional
If you think that doing things on your own is too difficult, you can opt to get help from a professional. This involves getting help through a credit counselor or a debt negotiator. There are paid and non-profit organizations that you can go to for help.
The advantage of working with these professionals is their expertise. When you tell them your financial situation, they immediately know what to do. They have the experience and training to react quickly and provide the best option that will help you get out of debt.
The disadvantage here is the service fee that you have to pay on top of your debt payments. While there are non-profit organizations, their services are usually limited. So if you really want to get thorough professional debt help, you need to pay for it. If it would mean less debt stress for you, the fee may just be worth it.
Just make sure that you will conduct adequate research and due diligence before you put your trust in a debt relief professional. There are scammers out there who will only get your money and not help you at all. So make sure you will really get sincere debt relief help. Read reviews and visit their official website to get clues about how they work and how satisfied clients are with their service.
And if you find the right company, make sure you only commit what you can really afford. They will help make things easier but they need you to cooperate. Provide them with the right information so they can help you.
Ask to have your debts reduced
Another one of the basic debt relief options that you can choose is to have your debt reduced. You will go to your creditor or lender and tell them that you can no longer pay off your debts as you did before. Because your financial situation is not going to get better anytime soon (e.g. unemployment or medical emergency), you need to request for more drastic changes to solve your debt situation. Like asking for your balance to be reduced. If they agree, this will make it easier for you to get rid of your debts completely.
Now there are two ways for you to do this. You can do it yourself. But make sure that you know what you’re supposed to do. Remember, you will be asking something from the creditor that they might not agree on. So be prepared to fight for this. Admittedly, this can be stressful. And it will involve a lot of research on your part.
If you think you can’t do this, you also have the option to hire a professional to help. They usually have an existing working relationship with your creditors and lenders. They know how to navigate the negotiation process so you can get favorable results. This will cost you but if it can save you more money, then it should be okay.
Prepare to declare bankruptcy
The last, but probably the least liked among the basic debt relief options, is to prepare for bankruptcy. This is the last resort for most people. And it should also be the same for you. Try to exhaust all the other options before you think about declaring bankruptcy. That’s because this will stay in your record for a long time.
Of course, even if it’s the least popular option, it doesn’t make it wrong. If you really have no choice, you can file for bankruptcy. But try to talk to a credit counselor before you file. This is mandatory anyway. Bankruptcy courts will ask you to talk to these counselors first. The goal is to make you consider the other options that you can use to get out of debt.
How to choose the right debt relief option
Now that you know the basic debt relief options that you can use, the question remains – how will you choose which one will get you out of debt?
There are three things that you should consider.
Type of debt
Take a look at the type of debts that you have. The different debts that you owe have various features that will help you decide the best debt relief option to use. For instance, negotiating your mortgage will not work because the bank can simply get your property as payment. But they don’t have the same hold on you if you try to negotiate credit card debts.
The next thing that you need to consider is your payment capabilities. This means taking a look at your income and expenses to determine how much you can afford to pay each month. Take note that your monthly debt payments should leave enough room for your basic necessities. If you can’t afford to pay for your debt payments and your basic needs at the same time, you need to opt for a debt solution that will make it easier for you.
Finally, you should always take your future plans into consideration. Every time you make a financial decision, especially if it’s about your debts, you need to consider what you want to happen in the future. The solution that you will choose should take you one step closer to the type of financial life that you want to have.