There are three common courses of action when it comes to tackling debt, which are:
While consolidation and asset liquidation are two preferred methods, in extreme cases, bankruptcy may be the best option for you. It’s important that you understand all of the options that are available when it comes to managing and getting out of debt.
If you’re just starting to get in over your head, now is the time to act! Don’t wait to look for solutions or assistance until you have creditors incessantly calling, as that will only add to this already stressful situation.
Start by looking for assistance right from the source: your creditors. They may be willing to negotiate a lower interest rate for you, depending on your income and credit score. Too often people assume that a creditor is the last place to turn to. They want to receive their payments and are more willing to work with you than you might think.
Reaching out for help before even entertaining the idea of bankruptcy is the key to success..
From debt analysts to financial planners, there are a variety of experienced professionals who can help you get your debt under control. If you’re not sure where to get started, this is a great route when it comes to understanding all of your options.
By consolidating your debt, you eliminate the barrage of bills that come in each month. It’s much easier to keep track of one payment plan. Consolidation is often considered to be a responsible debt solution, and you’ll be able to start repairing your credit right away. Some debt consolidation plans come with fees. Carefully calculate different options so you know exactly how much you’ll be responsible for each month.
Reviewing your debts is an excellent way to take an in-depth look at your finances and find places that you can cut back on. Smart spending habits will help you both in the short and long term.
Should you decide on this course of action, there are some things that you can do to better prepare for consolidating your debt, which are:
When people think of asset liquidation, they often imagine selling off everything they own and moving into a small studio apartment. Sometimes asset liquidation can simply mean selling an expensive version of something you have and opting for a more affordable counterpart.
Asset liquidation is a great way to pay down debts and is often an overlooked one. Take stock of the pricer things you have in life, or ones that are costing you the most every month, and determine from a financial standpoint what makes the most sense to sell.
While declaring bankruptcy has never been an attractive option for debt solution, it is now even less so, what with recent laws that make it more difficult to be eligible.
When you declare bankruptcy, you’ll have a negative mark on your credit that will follow you around for years. As this course of action means that creditors don’t get the money that you owe them, future lenders are much less likely to want to work with you. This makes it much more difficult to secure a car loan, mortgage or even a credit card.
The main takeaway? Bankruptcy should only be considered as a last resort after all other possibilities have been thoroughly exhausted.