Debt Relief

Debt relief, does that sound like music to your ears? Are the bills piling up out of control? Is the phone ringing with the sound of bill collectors? Fear not, there is hope and a way out this situation. You need to take action and get debt relief before this becomes any worse.




What is debt relief? Simply put it is a way to remove your debt so that the collection activity stops. If you are not in collections but still drowning in debt, there is relief for you as well. Did you know that many Americans are virtually up to their eyeballs in debt -- the big house in the prime neighborhood, the pricey gas guzzling SUV or high end luxury car, the kids in martial arts class or playing hockey, etc? This all costs money and most of us do not make enough to cover what we spend. That is where the problem is. To truly become debt free or at least to get relief from your debts, you must make some significant life changes.




First, let's look at the situation. You are drowning in debt, but nothing is in collections. However, you are one paycheck away from disaster. If anything were to happen and you lost your job, it would all go to pieces within 1 month, maybe 2. The best thing to do in this situation is to refinance your home, if you can. Go with something that has the lowest rate possible, maybe an interest only loan. This is where you only pay interest for the first few years. Your payments are lower. If you roll up all of your debt into this type of refinance, your payments will be lower and you will clear up your outstanding loans. Here is where it will get tough. You can only do this once. If you refinance everything and keep spending, buying new cars, etc., then you are just going to dig yourself into a hole you cannot get out of. This action will take discipline on your part but there is help for you. Go to a credit counselor. Many banks and credit unions offer these services for free or for a nominal charge. You can also take a money management class. You need to learn how to manage your finances better. Get the education you need to keep out of debt.




Next situation is a little more serious. You have accounts in collections and you need immediate debt relief. This is a little more difficult but not impossible. First thing to do is add up all of your debt and figure out how much you actually owe. Borrowing more money at this point is not a good thing. You can look at certain options. If the situation is very bad, you may want to consider bankruptcy. It will provide you with some relief for your debts and give you a clean slate. This has to be looked into very carefully because a bankruptcy will stay on your credit file for up to 10 years and if a loan application asks you if you have ever filed for bankruptcy (even after the 10 years) and you answer no, that is fraud. Another option is a company that offers credit counseling and debt relief. Be careful as there are a lot of fraudulent companies out there. A reputable company will look at all of your outstanding bills, ask you for 1 monthly payment and then distribute that payment toward the creditors (plus their fee). They will work with your creditors to reduce or stop interest payments on your accounts. You will have to cut up your current credit cards and learn to live on a budget. Be sure that they allow you enough money for living expenses. These companies do not work with your utilities, landlords, etc. They only work with your creditors. Debt relief is possible, even in the worst situation.




So, now we have explored many options on how to get relief from your debts. There are ways to refinance, and for more extreme situations there are debt relief programs and bankruptcy. No matter what you decide upon, lifestyle changes will have to be made. Be sure to get some form of credit counseling so that you can learn to manage your finances better. There is hope; all you need to do is decide which type of debt relief is right for you.