Debt has become a common household phenomenon the world over with most people. The main reason for this is the overwhelming amount of consumerism that is spreading across the nation. As a result of this people are purchasing things that they can’t really afford on credit. This is thus making people fall more and more under debt.
When people are in so much debt, they would definitely search for ways to get out of debt.
Here are five ways in which you can get out of debt.
1. Debt management – This is the most straight forward method of debt relief
that can be used when you have started incurring debts and want to get out
of them as soon as possible. Debt management consists of a program in which
you need to get enrolled. As a part of this program you get your interest rate
reduced. You have to pay a professional fee for the services.
2. Interest rate arbitration – In this method of getting out of debt, your interest
rate is reduced. This can be done by taking a secured loan against your
property. However, there are risks with such a method. If you fail to pay back
your secured loan, your property may be confiscated.
3. Debt consolidation – In this method of getting out of debt the two main
features are that your interest rate will be reduced and you can make single
monthly payments. The three methods of debt consolidation are:
• Consolidation loan – This process replaces all your multiple debts with a single
loan. The problem with this method is if you don’t get a lower interest rate
with the consolidation loan, it becomes difficult to pay the loan back.
• Consolidation program – You can repay all your debts with single monthly
payment. This can be done by providing the debt consolidation company, with
which you have signed up for the debt consolidation program the amount of
money at the beginning of every month which they distribute amongst your
various creditors. You have to pay a professional fee for this service.
• Balance transfer method – With the help of this method you can pay back your
debts with zero interest rate. However, you have to be careful to pay back
your debts till the zero interest rate offer, which is an introductory offer
lasts. Once this period is gone, you have to pay high interest rates.
4. Debt settlement – With the help of this method you can get rid of debts quickly
by reducing your outstanding debts. The downside is that your credit score
takes a huge plunge.
5. Bankruptcy – There are two kind of bankruptcies, Chapter 7 and Chapter 13.
In Chapter & bankruptcy, you can get rid of debts and your credit score drops
by 200-250 points. In Chapter 13, you are drawn out a repayment plan to pay
your debts back.
Thus you can see the various ways you can get out of debt.