Options for Getting out of Debt
Debt is a funny thing, right? We start with a little and have full confidence we can handle it, but over time a little debt can easily become a lot of debt! Sometimes it happens over time and sometimes it happens fast. Sometimes we can control it and sometimes life happens. Whatever the situation, you may find yourself with more debt than you know what to do with and you’re wondering how to get out from under it.
Debt is something that starts to take over our entire life. When we’re in major debt, it’s something that is on our mind every time we have to buy food, every time we get the mail, every time we check our messages, and often haunts us even in our sleep. Debt can cause major stress and ultimately start to affect every corner of our lives. That’s why it’s so important to find a way to manage your debt, especially if it’s out of control.
At Debt Quest, we want people to know that they have options. Debt is NOT something that has to control the rest of your life. But, you do need to take action. Ignoring debt has never worked well for anyone. If you find yourself wanting to just ignore your outstanding debt, take it from us: you want to get a plan in action sooner rather than later.
When you’re approaching debt relief, the first important thing to realize is that you have options. There isn’t just ONE way to get out of debt or manage large amounts of unsecured debt. You actually have a number of options and based on your own unique situation, some options may be better options than others.
One common approach is to consolidate your debts from multiple loans with varying interest rates into just one loan with one interest rate. This option can help diminish stress significantly because you aren’t juggling so many different loans, deadlines, and rates. However, it’s important to realize that you are still responsible for the full amount of debt AND you still are paying interest on that amount of money. This process takes a lot of discipline, but can be a really great option that sets you up for great financial habits for longterm financial success.
Bankruptcy is a process that you have to get approved with the courts (so it is usually recommended to get an attorney involved) that allows you to get a fresh start. There are different forms of bankruptcy, so in some scenarios your assets are liquidated in order to pay off your debts. Other forms of bankruptcy extend your timeframe to pay down debt and hold off creditors. It’s important to know that with bankruptcy, you may get some grace shown to you in terms of debt being wiped away or grace periods, but that can come with a cost. Bankruptcy is helpful, but it also puts a stain on your credit for ten years, which can make future financial steps harder to take. Think about situations where your credit may be checked (buying a car, buying a house, getting other loans, etc.) and realize that the bankruptcy is something you will have to explain and deal with for many years to come.
Debt Settlement is a process where experts negotiate with your creditors on your behalf to decide upon a lump sum amount that will be paid to pay off that loan in entirety. This means that the bank or creditor gets payment in a large quantity and forgives the rest of the amount owed. During the negotiation process you may still need to make payments to a separate account that is helping account for that “lump sum” amount. This is a great process because it gets creditors off your back and can help you avoid bankruptcy. However, this process has the potential to negatively hurt your credit score and it’s a lengthy and involved process.
Go At It Alone
You always have the option to continue chipping away at your debt alone. This requires enough income to cover your monthly payments, and often major organization and discipline to juggle multiple loans. You also have to know your rights as a debtor to know how to navigate creditors calling. For most people, this is simply too hard to do on their own. If your debt is causing your major stress already, this is not the ideal option. You need real help from trusted experts who can help you figure out how to get debt wiped out.
We are not big fans of that last option, simply because we know how hard it can be for people to manage massive debt on their own. We know the power of debt management and we want to help our clients get back on track for a healthy financial future.