Free yourself from debt.
There are countless reasons one can fall into debt. Some people lose their jobs. Others suffer medical emergencies.
And then there are those who don’t manage their money properly.
Time for a quiz!
Test your know-how before you start to see how much help you need. Can you skim this section, or do you need to take some time on this topic?
How can you get out of debt on your own?
A. No one can get out of debt on their own.
B. Tell your creditors you won’t be paying them back.
C. Negotiate with your creditors and start a new payment plan.
D. Use a debt settlement company.
Potential solutions
The following list provides some detail on the debt solutions you can use to avoid bankruptcy:
- Do it yourself (DIY): In some cases, you can negotiate with your creditors to lower your interest rates and create a new monthly payment plan. This means more of your monthly payments go toward reducing your debt instead of paying off interest. Begin with the highest interest rate card first and pay off one card at a time.
- Debt consolidation: This is where you roll multiple debts into one payment. You can transfer existing credit card balances to a low-interest credit card or take out a personal debt consolidation loan through a bank. In either case, you’ll need good credit to qualify for the ideal terms needed to help you lower your debt.
- Debt management program: This consolidates your debts, lowers your interest rates, and can get penalties and fees eliminated from the accounts included in the program. It also protects your credit score.
- Debt resolution: This option is used when you are in an emergency situation. You can call the collection agency holding your debt and offer to pay them as much as you can. If they agree, they will discharge the remaining balance of the debt. Make sure it has been noted on your credit report that the debt was paid in full.
- Bankruptcy: There are two kinds of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 liquidates your assets to pay off the debt. Chapter 13 sets up a payment plan. Once it’s through, you must take an initiative to repair your credit.
