Deep debt can hinder your lifestyle, forcing you to concentrate on paying down what you owe and often at the expense of taking a vacation, eating out, buying a car or spending money on other interests. Those consequences, however, can impact adversely in other ways including paying for your health insurance, having enough money to cover the rent, and even keeping the lights on.
It is possible to get out of debt without money. Both options are extreme and one should be considered as a last resort option. Both choices can adversely affect your credit score, but if your credit is already bad then these methods may be your only viable choice.
Negotiate With Your Creditors
That credit card bill with 19.99 percent interest is a real killer. your interest rate is far above the cost of lending and at least double what people with very good credit pay for their credit cards. There must be a way to get this rate lowered, perhaps even having your debt dismissed.
Creditors may be willing to negotiate your debt by simply agreeing to charge you a lower rate. Immediately, you have set in motion the steps needed to reduce your debt, but without eliminating it completely.
If bankruptcy is looking like a solid option for you, then tell your creditors that you are considering this step. Most will negotiate a lower rate, hoping to recoup at least some of their loss. Some may accept a settlement, one where you agree to pay a lump sum in exchange for having your debt canceled. For instance, you owe $5,000 on your credit card, but have no job and just $500 to pay off what you owe. Demand that your creditor list this debt as paid, not settled, as the latter notation in your consumer reports will adversely affect your credit.
File For Bankruptcy
While the first option may still entail that you come up with some money to settle your debt, another method for getting out of debt is to file for personal bankruptcy. Personal bankruptcy, however, may not resolve you of what you owe as Chapter 13 bankruptcy creates a payment plan to pay off what you owe while Chapter 7 bankruptcy can erase your debt, but not necessarily completely.
If you qualify for Chapter 7 bankruptcy, you meet several conditions according to consumer bankruptcy attorney Tom McAvity. These include: you have few assets, you have low or no income, and you have other hardships that make paying off your debt impossible.
Keep in mind that if you do file for personal bankruptcy, that information will remain on your credit record for 10 years. It can affect everything about your life too including your ability to get an apartment, to secure a new job, or take out new credit. Moreover, the process is not entirely a cash free method — you will stay have to pay the attorney fee and court costs. Also, some debt cannot be forgiven in court including most student loans, some tax payments, any criminal fines and proven fraud. Your attorney can help you understand what your responsibilities are.
Some Money Available
So, to answer the question, “can you pay off debt without money?” No, at least not all of it. You can, however, negotiate with your creditors and find a way to get some relief while you get back up on your feet. Pursuing this option can lighten your burden, perhaps enough to make real relief possible.
See Also — The Impact of Personal Bankruptcy on Your Credit
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