Five Best Solutions to Overwhelming Debt

Five Best Solutions to Overwhelming Debt

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If you’re in a lot of debt, it can seem like there’s no way out. No matter how much you owe, though, there are solutions to help you get on top of your finances again. Take a look at these five solutions to overwhelming debt to get some ideas on how you can make your situation more manageable.

Consolidation

By going through loan consolidation, you can end up with a lower monthly payment. You may qualify for a lower interest rate than what you have on your current debts, so more of each payment will be going towards the principal. The interest rate can go up if you take out an unsecured loan, however, and you could risk your home if you use it for collateral to obtain your loan, so be careful.

Downsize

A house is probably the most expensive thing that anyone will buy in their lifetime – in 2010, the average price of a home was more than a quarter of a million dollars. If you can manage to sell your house and buy a cheaper one, you can pay off a lot of debt in one lump sum. You can find cheaper housing by getting a smaller house, looking for a home in a different area of town or buying something that needs a little work.

Bankruptcy

You may be so far in debt that you can’t afford everyday expenses. If this is the case, filing bankruptcy with a company like All Family Law Group can help. You may still be left with some loans. For instance, student loans often can’t be discharged by bankruptcy. Many other forms of debt can be forgiven, though. Make sure you know the difference between Chapter 7 and Chapter 13 bankruptcies beforehand as well, and get clear consulting prior to committing to a bankruptcy.

Financial Counseling

Many companies out there use people’s financial difficulties as an opening for abusive practices, often by presenting themselves as consultation and debt reduction firms. However, you still can find organizations whose goal is to educate those in debt and provide reasonable solutions. The National Foundation for Credit Counseling, for instance, is a government-supported organization committed to offering safe debt advice. All the companies associated with NFCC must adhere to stringent governmental guidelines in order to retain their association with NFCC. This regulation allows you to more safely access financial counseling.

Income-Based Repayments

If you owe a lot of money from your college days, find out about income-based repayments. Since student loans can be astronomical based on your individuals circumstances, this can be a godsend. You’ll still have your loans, but you could end up paying significantly less each month, or you could even qualify to have payments of $0. If you haven’t managed to pay it all off in 25 years, your loans can be forgiven, so you don’t have to worry about making payments during retirement.

There are many ways to get out of debt, even when it seems like you’re past the point of no return. By looking into options like refinancing, downsizing, bankruptcy, credit counseling and income-based repayments, you can get your debt under control quickly.

About the author:
A recent college graduate from University of San Francisco, Anica loves dogs, the ocean, and anything outdoor-related. She was raised in a big family, so she’s used to putting things to a vote. Also, cartwheels are her specialty. You can connect with Anica here.

This article uses information from All Family Law Group, P.A.

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Categories: Debt Management

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