4 Debt Reduction Tips
If you are overwhelmed by debt, there are options you can take that will help you pay off what you owe without the stigma of filing for bankruptcy. We'll examine four ways you can get your debt under control and start working back on the road to financial recovery.
1. Contact your credit card companies. Ask each credit card company for help. They aren't likely to forgive you your loan, but they may be willing to reduce your interest rate. If your interest rate is currently 12% or more, ask if they would be willing to cut their rate in half. Why would they consider doing this? Well, creditors do not want you to default on your loan and they want their principle back. Sure, a nice fat interest charge would be ideal too, but if they sense you are ready to default on your loan, you can expect that a lower rate will be offered instead.
2. Consider a debt consolidation loan. You can pull all of your debt together into one account, preferably one featuring a fixed, low interest rate. You can use the proceeds from the loan to pay back your other creditors and then make monthly payments back to the loan consolidator.
3. Home refinancing. Refinancing your loan may be just the debt reduction help you need as the funds saved by you each month with lower mortgage payments could be used to pay off other debt. Caution: you are placing your home "at risk" if you opt for this choice.
4. Visit a credit counselor. There are credit counseling companies who help consumers by offering debt reduction plans to tackle debt. Essentially the way this works is that you will meet with an advisor and lay out a plan to repay your loans. The counselor will negotiate with lenders on your behalf for the lower rate which, in turn, will reduce your monthly payments as well as keep your credit rating intact. Credit counselors work for private companies as well as for government agencies or nonprofit firms. Be careful: a lot of what these people do you can do on your own. Read the fine print to make sure you understand any fees involved; make sure that your credit rating is not adversely affected too.
Don't despair if you are well over your head in debt. Recent changes in U.S. bankruptcy laws have made filing for personal bankruptcy a less attractive option for consumers. Still, if it is your only resort visit an attorney specializing in personal bankruptcy to learn what your options are. Do not be bullied by anyone to make a decision that you will regret later.
Matthew Keegan is the owner of a successful article writing, web design, and marketing business based in North Carolina, USA. He manages several sites including the Corporate Flight Attendant Community and the Aviation Employment Board. Please visit The Article Writer to review selections from his portfolio.
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Debt consolidation is a popular topic these days. The average American carries nearly $10,000 in credit card debt and credit card debt of $100,000 is not all that unusual. New legislation that takes effect in October 2005 is going to make it harder for those with problem debt to file for bankruptcy, so many people are trying to find ways to consolidate their debt instead. One of the most popular ways to do that is through a home equity loan, but borrowers need to be careful, as there are potential problems with borrowing against your home to pay other debts.
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There was a time when incurring debts was looked down as one of the worst crimes ever. People were punished for not repaying within the stipulated time. Charles Dickens' s father spent months in a debtor's prison because he was unable to pay off his debts. With other ghoulish crimes taking center stage, debts have become a commonplace now. However, sinking in debt has increased with the introduction of newer and scientific temptations. Credit cards are the most popular and the worst temptation. All of us feel rich all the time because of these plastic cards. We hardly realize the pains we have to go through once it is paytime.
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