6. Think about debt consolidation.
When managed independently, debt settlement might be a realistic approach to minimize your debt. Consumers can negotiate their debt settlement by contacting their creditors and offering improved payment schedules as well as the fee, interest, and amount reductions. Although third-party debt settlement solutions are available, they should be avoided.
These programs request that you stop paying payments to push creditors to give a lesser repayment amount. This method, however, is not guaranteed to succeed and will most likely harm your credit. Furthermore, these programs charge exorbitant fees and are sometimes riddled with fraud.
This could be a viable solution for individuals who…
- Make time to communicate with creditors.
- Can keep track of outreach progress and agreements.
- Are currently suffering financial difficulties that they can document for creditors
The first two crucial steps are to identify your debts and then develop a sustainable budget so you know what kind of payments you can make to creditors. If you’ve recently received a large chunk of money, you may be able to negotiate a lesser payoff amount than what you owe. When you’ve determined what you’re willing to offer, contact your creditors and begin negotiating.
In some circumstances, you may have to play hardball to get debt relief.
7. Consider your bankruptcy options.
If full debt repayment appears to be out of reach, bankruptcy may be an option to consider. This debt relief method, however, will badly harm your credit. Chapter 7 and Chapter 13 are the two most common types of consumer bankruptcies:
Chapter 7 bankruptcy is a liquidation bankruptcy in which assets are liquidated to pay off debts, and any leftover unsecured debts are discharged.
To qualify, you must pass a means test and demonstrate that your income does not exceed certain limits. Chapter 13 bankruptcy is a repayment plan bankruptcy.
You design a three- to five-year repayment plan through it, and once finished, the rest of your unsecured obligations are forgiven.
This could be a viable solution for individuals who…
- Passes the means test.
- I don’t see any other way out of debt.
- Are you capable of drafting and sticking to a three- to five-year payback plan?
Bankruptcy is not something you should file on your own. Instead, hire a bankruptcy professional to assist you in determining the specific filing requirements of your local bankruptcy court. You must also attend a debtor education class and provide a certificate of completion after filing.
