Complete Debt Help Options Explained

Different people, different debts, different solutions

Being in debt does not make you unique. Debt has existed for thousands of years from the earliest traders who promised to be back with an extra load of furs, to promises that will be fulfilled when the harvest is brought in later in the year. While having debt is not at all unique, what is unique is the exact composition of your debt and the income that you have for dealing with it. Are you struggling from too many credit cards? Perhaps you've just graduated from college and are dealing with student loan debt. Maybe you spent a few years ignoring the IRS and they've finally taken exception. Whatever your situation, there are methods you can use - some of which include personal development - to help eliminate the debt and see to it that you don't have the same problem in the future.

Credit and Budget Counseling

The most basic level of service, credit and budget counseling is used when a financial expert determines that your income is sufficient to the task of paying off your debt every month and meeting your living expenses - the reason you may be having problems every month is likely due to overspending. With credit counseling, you will learn what a budget is, how it works and how to apply one to your specific financial situation. Once you have resolved to make these changes to the way you view and spend money, you should be set to manage your own debt in the future. Often, even if your debt counselor recommends a different course of action, some form of counseling or budget advice will not be far behind, in order to help you avoid landing in the same debt mess a second time in the future.

Debt Consolidation

Debt consolidation is one of the most common methods of attempting to resolve serious debt issues, because it can be done without negotiating with your creditors or seriously impacting your credit score in a negative fashion. Debt consolidation occurs when your credit score is sufficient enough to take out a new loan and use it to pay off your existing debt such as credit cards or student loan debts. In this way you will find, rather than paying off multiple debts every month, you will only be paying the new consolidation loan. The source of this new loan can come from many places such as through home equity loans, lines of credit, a new credit card or a personal loan. Your credit counselor will help you determine which method is best for you and how to get started if you qualify for consolidation.

Debt Negotiation

The second most aggressive thing you can do when trying to get a handle on a bad debt situation, debt negotiation entails calling (or having a professional call on your behalf), your many lenders and convincing them to reduce your interest payment or settle the debt for less than the actual balance owed. This will have a substantially negative impact on your credit score as those lenders you owe money to will report to the agencies that you did not completely satisfy your obligation to them.

Bankruptcy

While debt counselors will not actually file bankruptcy for you, many of the services in our network are certified and able to provide the classes or counseling that are required before you can file for bankruptcy to have your debt discharged. Whether or not bankruptcy will be recommended to you depends on the type of debt you have and whether or not you have assets that may be seized in the bankruptcy. Not all debts can be discharged through bankruptcy - usually those debts that are backed by the government, such as student loans or money owed to the IRS.