Written by: My Housing Resources Staff Writer
Anyone who has owed money will understand how stressful it can be. But it doesn’t have to be, because you have more options than you think. This article will go over basic debt management strategies that will help you climb out of the hole. Keep on reading to learn more.
In general you should consider debt management or settlement when you’re unable to pay your debt within five years. You won’t want to keep spending the same way if you don’t see yourself debt-free past that time frame.
Whether it’s credit cards, medical bills, or personal loans, it’s important to have a manageable amount you’re able to pay off each month. But if the total amount of unpaid debt is equal to or exceeds your total income, you’ll want to get serious about planning a strategy.
You should get in touch with a bankruptcy attorney before you agree to a debt settlement or management plan. Consultations are usually free, and even if you don’t qualify you’ll have other options to explore.
Chapter 7 liquidation is a popular form of bankruptcy, which can erase most credit card debt, medical debt, and personal loans. However, there are a few things to keep in mind if you go this route.
Any child support, student loan debt, or taxes owed will probably not be forgiven through Chapter 7 liquidation. Your credit score can be severely impacted as well, staying on your credit report for up to 10 years.
If credit card debt is the main problem, it’s time to put together a debt management plan. You’ll probably be able to make monthly payments at reduced interest rates or have fees waived too.
You would be making monthly payments to a credit counseling agency, which has agreements in place with debt management clients. The National Foundation for Credit Counseling is a great place to research officially accredited agencies.
Financial burdens can cause us to make bad decisions sometimes. It’s important to avoid choices that can bury you even deeper into debt. Let’s go over common mistakes people with alot of debt often make.
Don’t borrow against your home equity, which puts you at risk of home foreclosure. Don’t pay a secured debt late in order to pay an unsecured one, such as a credit or medical bill. You could lose the collateral that secures your debt.
The best way to deal with unmanageable debt is to think clearly and logically. Don’t let emotions cloud your judgment. Instead, find out what options are available and choose the one that fits your situation best. All it takes is some research and thinking ahead.