Debt can be very scary. If you’re struggling every day just to make ends meet, the light at the end of the tunnel can seem a very long way away.
The first thing you need to know is that there are options. No amount of debt is hopeless. You can get rid of your debt and start anew. The route out of debt is different for every person. Which choices are right for you depends on your personal financial and life circumstances.
You may have heard about debt consolidation [1] on TV. There are many commercials that make it sound like the perfect solution to every debt problem. Debt consolidation companies make it look easy. However, it’s not for everyone. Debt consolidation involves taking out a large low-interest loan and using it to pay off all of your high-interest debt, like credit cards. In theory, this can save you a fortune in interest payments. However, it only works if your credit score is high enough to qualify for a good deal on a loan. If your credit history [2] is already severely damaged, a debt consolidation loan may be too expensive to make financial sense. There is no point in replacing one expensive debt with another. Speak to a debt consolidation service to find out if consolidating debt is right for you.
Another option is debt settlement. With debt settlement, you negotiate with your lenders, either directly or via another company, to reduce the total amount you owe and set a repayment schedule for the rest. If it sounds like erasing debt, that’s exactly what it is. Oftentimes, lenders are happy to agree on a lower amount, especially if the alternative is you defaulting on your debt. Debt settlement does have a couple of huge downsides. You will probably have to pay income tax on forgiven debt. Also, debt settlement can destroy your credit score. But when the alternative is bankruptcy, a lower credit score may be inevitable.
Managing debt is hard. It’s easier to stay out of debt in the first place. Don’t spend more than what you have. Credit card money isn’t real money, it’s debt.
www.debtgoal.com [3]
For help with debt call toll-free 1-800-213-4430.