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If you ask yourself how am I going to pay my debt off then you will want to know what options are available to you to get your debt under control. There are four main options: debt management, debt settlement, debt consolidation, and bankruptcy. You will want to pick one of these options, doing nothing will only result in lawsuits from your creditors.
You will need to employ a debt management company in order to start a debt management plan. They can be very adept at what they do. They will contact credit card companies to see if they can get the interest on the cards reduced. They will try to get late fees removed. By doing this the monthly payments will go down drastically. You still repay the credit card bills but at a lower monthly payment. You will actually pay your debt off by paying the management company one monthly payment. They in turn break the money up and send it to the credit card companies. This will affect your credit for a short period of time. Your credit may take negative hits mainly because you no longer pay the bills, the management company does instead.
Your best bet when going with a debt settlement is to hire a debt settlement company. They are better able to handle the credit card companies than you are. With debt settlement you will get rid of your debts by paying the credit card companies a small portion of what is actually owed. Some debt settlement companies can get credit card companies and other creditors to lower their bill by 40%. This too will have an impact on your credit. Since you are not paying back the full amount owed you will probably be troubled with bad reports for approximately five years.
Your creditors will often settle for less and debt settlement companies know this. Creditors would rather receive part of their money than none of it and that is what most likely would happen with a bankruptcy. You can attempt to do a debt settlement on your own to save the money you would spend on a settlement company. You really should not attempt it unless you have some knowledge of what you are doing.
If you have a steady job that you feel you are going to have for a while and if you own your own home you may want to get a debt consolidation loan. A consolidation loan is a good way to pay debt off if you do not mind putting your home up as collateral. Nearly all consolidation loans will require collateral. In most cases it will be your home. A consolidation loan will pay off all of your debts and give you one low monthly loan to pay off. The interest rate will be much lower than your credit cards and probably lower than most of your other unsecured loans. A consolidation loan will not affect your credit in a negative manner unless you start to miss payments. If too many payments are missed you are liable to lose your home. The company that gave you the consolidation loan can force you to sell your home so they get paid.
Bankruptcy should be used as a last resort to pay my debt off. You should hire a bankruptcy attorney when filing for bankruptcy. They are better able to get the bankruptcy to go through than you are on your own. They know what to do and what way you should file. They will be able to tell you whether chapter 7 or chapter 13 is the best method to use. A bankruptcy will forgive all or most of your debts, depending on the method you use. The problem with a bankruptcy is it affects your credit very negatively for a long period of time. A bankruptcy will affect your credit for up to ten years. It will make it difficult to buy a home and you may even be refused employment because of it.
These are all methods to get rid of debts once and for all. When hiring a debt settlement company or a debt management company use caution. Always check with the Better Business Bureau to make sure the company is a good one or not.
Your home may be repossessed if you do not keep up repayments on a mortgage, loan or any other debt secured on it. Think carefully before securing other debts against your home.