Beware Debt Cancel Rotating Header Image

Options to Become Debt Free

Regardless of how you got into debt, there are options to get debt free. Which option is best for you will depend on your situation.

The first option is simply to work to pay off your debts on your own. It’s not enough simply to pay the minimum amounts due on each card. Create a budget to determine how much you can afford to put towards paying off your debt. By increasing the amounts you pay each month, you are greatly decreasing the amount of time that it will take you to pay off your debt. It is a good idea to start with the debt with the highest interest and concentrating on getting that paid off, then moving on to the credit card with the next highest interest, etc. This is a good option for those with only a low to moderate amount of debt or who have the willpower to stick to a strict budget.

Another option that people choose for getting debt free is a loan. This could be a debt consolidation or home equity loan. Debt consolidation loans are specifically designed to pay off debt, and generally carry a larger interest rate than normal car or home loans. They also are not available to everyone. A homeowner can generally get a good rate with a home equity loan, but it is not usually a good idea to use it to pay off debt. With a home equity loan you are securing the debt with your home and could be at risk of losing it if you do not pay off your debt.

A third major option is a debt management plan. This type of plan is beneficial for a wider range of people as it can be made to fit your needs. With this plan, you will pay one monthly payment to the debt management company who will then distribute that money to your various creditors. They can usually work with your creditors to lower your interest rates and cancel many fees on your accounts. This will allow you to put more money to actually paying off your debts. In many cases, you can become debt free in three to five years with a debt management plan.

Another option that carries little benefits is debt settlement. Debt settlement companies often promise more than they deliver, so be careful. They will attempt to work with your creditors to allow you to pay only a portion of your debt. After you add on the extensive debt settlement fees and the taxes you have to pay on forgiven debt, you often don’t pay any less than you could have if you had just paid your debts in the first place. Also, there is no promise that they will be able to work out a beneficial deal with your creditors anyway.

A final option is bankruptcy. This is an extreme solution and should only be used when others have failed. While bankruptcy can allow for people to have a fresh start, it also ruins your credit for years to come. Make sure that it is absolutely necessary before you take this step.

Whichever option you take to get free of your debt, make sure that it is the best option for you. A great way to determine which might be best is to talk to an accredited credit counselor who can analyze your situation and give you a proper assessment.

Ronnica Rothe is a graduate with honors from the University of Oklahoma and a current student at Southeastern Baptist Theological Seminary. She works with lowcardinterest.com to help individuals get out of debt and reach their financial goals.
Free WP Autoposter Plugins

Leave a Reply

Your email address will not be published. Required fields are marked *

Powered by Yahoo! Answers