Tried And Tested Debt Solutions

Being in debt is not any fun so if you are, then you must be trying to find a way out of it. Take some comfort in the fact that there are debt solutions available to you. In choosing the one most suited to your financial needs consider the type of debt you have and how much you owe. If your debt is not yet at the critical point you can opt to pay down the debt yourself or take out a home equity loan. If the debt is looming large consider the route of debt settlement or credit counseling. Let’s examine these and see if we can find the one that best suits your position.

One solution is to repay the debt on your own. In order to do this you will probably have to use money from your 401k, liquidate some assets, or use up your savings. While you might not be too happy about having to eat into these funds, consider the alternative of having high interest debt eroding any possibility of investing. Having paid off your debt you will be in a good position to build an investment portfolio and recoup losses.

Consider taking out a home equity loan. The equity in your property is the difference between the market value of the property and the mortgage owing. You can borrow against the value of that equity. These loans normally offer lower interest rates. You would therefore have the more attractive prospect of using this to pay off your high interest debt. After this your focus would be on repaying a single loan.

You can opt for credit counseling. For this you will need to engage the services of a credit counseling company. Essentially they will do for you what you have failed to do for yourself. That is; help you get your financial affairs in order by making a budget, cutting expenses and drawing up a debt reduction strategy. The goal is to get you to pay off your debt in as short a time as possible.

Another solution is debt settlement. This is the usual route if you have high interest unsecured debt. Here again, it is best to retain the services of professionals. Creditors will tend to agree to this option if the debt has been unpaid for a long period and there is very little likelihood of them being able to collect it. Faced with this scenario the creditor will be willing to settle for as low as 20% of the outstanding balance rather than nothing at all. However, the lump sum settlement must be paid in full once an agreement has been reached.

The debt solution you choose will be dependent on your financial position. Opt for the one that is least likely to hurt your credit rating and will get you out of debt quickly. If you fail to act then the specter of debt will continue to hang over you and in the long run you will end up paying out large sums in interest payments.