Getting Out of Debt
February 25th, 2010
No one likes to be in debt. But sometimes getting out of debt seems to be something of an impossible task. Our bills and our financial debt can be so deep we feel like we are in a black hole where no light is shinning and no solutions can be seen. Yet there are many ways that you can investigate in order to get yourself and your family out of debt.
One way would be to consider debt consolidation. When you consolidate all of your debts it usually means you make arrangements with a debt consolidation company to lower your total debt and monthly payments toward those debts.
For instance let’s say your monthly payments for all your unsecured credit debt runs about $500 a month. If you were to consolidate your debt you may be able to lower that monthly payment to just $200 a month.
Lowering Your Debts on Your Own
One of the most drastic ways of getting out of financial debt is filing for bankruptcy. Depending on your circumstances this may be the only solution for you. However most people don’t realize that they can negotiate with their credit card providers and lower their debts quite drastically. Many people have great success in lowering their debts on their own.
Let me just give you one example. Because of the recent recession credit card companies and banks have become rather sensitive when people fail to make their monthly payments. A good friend of mine, I’ll call him Jack, became very upset when the credit card company he owed $5000 notified him in the mail that his interest rate would go from 10% to 29.99%.
Jack was furious when he received this notification. So he called his creditor and after they refused to lower his interest rate he offered them $.50 on the dollar to pay off his debt all at once. He told them he would send them a check that day if they accepted his offer. Since Jack had never been late on any of his payments they did not accept his offer.
However after just two months of not making his monthly payments he received a phone call. Jack was surprised when they offered him a deal. In fact they offered Jack a deal of $.40 on the dollar. The very next day Jack sent $2000 to this credit card company saving himself $3000.
Jack did this all by himself. He didn’t need to go through any debt consolidation company. His credit is fine, since part of the agreement of paying off his debt was that the creditor would remove any negative marks they had placed on his credit score. You see, there is a great deal you can negotiate with your creditors. If you don’t know how and don’t have time to do it yourself, help is out there for you.
Not everyone feels comfortable dealing with credit card companies and banks on their own. This is where a debt consolidation company can be helpful. Just remember if you are going to seek help and obtain debt counseling, be sure that you are not going to be charged outrageous fees thus getting you into further debt. There are non-profit organizations that specialize in helping people consolidate their debts.
Research your options and remember that there are indeed many options for people dealing with financial stress.
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Debt settlement appears to be seen as a true strategic option for people struggling with debt. For the past several years I have been tracking the debt market very closely and it is difficult to guage what you are getting for your cash. I am aware that there are a number of debt settlement companies in the market that deliver outstanding solutions and the debt settlement customers truely benefit, but I also know there are a number of debt consolidation providers available today that are focused on collecting new customer fees and enrolling new subscribers. No doubt this is why there is new fed regulation in the debt settlement industry. My sister in law used a debt negotiation service provider and was very very very satisfied with the outcome.