Are you looking to get out of debt?

In the United States, debt can be both a necessity and an evil. Sometimes, you need to go into debt to purchase a home, a car, or an education.

However, if you rack up too many charges and can’t pay them back in time, it can land you in a heap of trouble. Too much unpaid debt can lead to bad credit, which affects your ability to make important purchases.

Fortunately, there are debt relief options. Read on to learn how they can save you and your wallet additional financial problems.

Credit Counseling For Debt Relief Options

If you feel like you’re drowning in so much debt that you can’t to get out of it, consider this your lifesaver. 

Many credit card companies offer credit counseling. During a credit counseling session, you meet with a financial expert to discuss your finances and create a practical plan. Your plan should have enough room for all of your necessary expenses. 

However, it will also show you your financial pitfalls and help you avoid them.

Debt Consolidation

When you follow this plan, you take out a loan that pays off all debts not backed by a guarantor.

Then, hope instead of paying several monthly charges and interest rates, you just pay what you need to for the loan.

Debt consolidation experts specialize in helping people get their debts down to manageable payments, so it helps to work with them.

Debt Management Plan

If possible, this is the plan you should go for. It’s the one most recommended by credit counselors when they see new clients.

Essentially, a debt management plan gives you a lower monthly payment. It also reduces interest rates and fees while allowing you to pay back everything in full over time.

Under this plan, you don’t have to take out a loan, which doesn’t put you in additional debt.

 Debt Settlement

It’s important to note that this is not something you should do if your credit is still decent, as it will negatively impact your credit score.

Still, if you have poor credit and need to get out of debt, debt settlement can be helpful. If you wish to pursue this avenue, you and the lender will come to an agreement in which the lender lowers your payment for a sum of money.

Bankruptcy

Pro tip: don’t file for bankruptcy unless you’ve tried all of the other debt-relief options.

However, bankruptcy is a relieving option to many, as it allows them to wipe the slate clean on their debt. Depending on whether you file for Chapter 7 or 13 of bankruptcy, much of your debt will be eliminated either immediately or in 3-5 years. 

Bankruptcy cannot eliminate all debts, unfortunately. Child support payments, student loans, and alimony must still be paid. It still, though, can go a far way in helping your debt.

More Financial Tips

Now that you’ve learned all about your debt-relief options, you might be wondering how to rebuild your finances.

If so, check out the rest of our finance-related articles. 

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