Dealing In Debt

Unemployment continues to be a problem and salaries are stagnant. Income issues contribute to personal finance problems, which are easy to spiral out of control. When it comes to debt there are ways to get out, you just need to know your options.

Choose Wisely

One of the most underutilized resources for debt relief is credit counseling agencies. While many people have heard of them, very few have taken advantage of their affordable services. Seeking help with a credit counselor is one of the best places to start when you are looking for debt relief. Why? Because they can educate you on all sorts of debt relief options.

• Debt Management Plan — these come in two forms. A personal debt management plan is when you develop a course of action to repay your debts on your own. You may decide to pay minimums on all but one account and funnel all your extra cash to that account until paid off, then repeat with another account. You may also choose a structured debt management plan where you deposit money into a credit counseling organization, who then pays all of your creditors on your behalf.
• Debt Negotiation — is when you make an arrangement directly with your creditor to repay your debts in a modified way. You might  be able to negotiate a  lower monthly payment, a reduced interest rate or a reduction in your overall amount owed. The key to debt negotiation is knowing how much you can afford to pay and the ability to demonstrate financial hardship.
• Debt Settlement — is an arrangement between you and your creditor, in which you offer a one-time lowered payment in exchange for the remaining debt to be forgiven. You may offer to pay a lump sum of $5,000 on a $8,000; whereby the remaining $3,000 balance would be forgiven and your liability of payment erased.