Debt has become an individual as well as national problem, which stems primarily because of the rapid use of credit cards.
Each month, we aim to pay off our credit card bill in full, but are
unable to succeed. Stagnant incomes, rising cost of living,
undisciplined spending and unexpected life events are only some of the
reasons that have increased the number of people who are struggling to
get out of their debt.
Consider the high interest rates that
are usually charged by creditors, and it becomes an impossible task to
manage debt effectively. One of the most important steps for achieving debt relief is look at the different options that can be used for solving the problem.
Each solution that can help people in
relieving their debt is unique. People need to learn the facts about
each and every option before deciding which one is suitable for their financial situation. Some of the options are as follows:
Mortgage Refinance
People have the option of going for
mortgage refinance or home equity loan for consolidating their debt.
Debt consolidation refinance loans are considered to be the best option
for individuals when they wish to reduce their payments and also lower
the cost of interest, as long as they are confident that they would be
able to make regular payments without adding more credit card debt. A
homeowner has to have excellent credit if they wish to qualify for a
mortgage refinance loan and their home should also have significant
equity.
Minimum Credit Card Payments
A very dangerous financial strategy for
people is to make only minimum monthly payments on their credit cards.
This means that people are simply putting off the problem for another
month. Individuals should try making their full monthly payments if they
want to get off the debt treadmill and achieve debt relief. Otherwise, they will have to deal with the lifetime cost of the debt in the form of high interest payments.
Credit counseling
This is basically a debt relief program,
which begins with a detailed and thorough financial review. If people
have serious debt problems that cannot be resolved without outside help,
the credit counselor will suggest that they opt for a debt management
plan. In this program, the credit counselor has the responsibility of
consulting your creditors for obtaining concessions in interest rates.
The major benefit of a credit counseling program is the lower interest
rate it can offer to individuals.
This debt management plan is a very
straightforward debt consolidation program. Individuals are only
required to make one single payment to the credit counseling agency
instead to the creditors. The payment is then distributed by the agency
to the different creditors of an individual.
Debt Settlement
This service involves negotiating and
settling the debt of an individual for an amount that’s less than what
they owe. This can even reduce debt by nearly half and it is an option
for those individuals who find it difficult for making their monthly
payments, aren’t worried about their credit rating and only want to achieve debt relief.
Bankruptcy
This should always be the last option
for individuals and should be chosen after every other alternative has
been exhausted because it will stay on their credit report for at least
10 years and will also mean that people have to give up some of their
assets. Do it Yourself Credit Repair Kit. Use the tactics that credit repair lawyers use.
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