Debt Advice

Not every debtor's financial situation is the same. You can always apply do-it-yourself methods to get yourself out of debt. If you are disciplined enough, that is.However, if you feel that you need the help of others, it's a good idea to seek debt advice from more capable individuals such as your accountant or a financial adviser. They can help customize your financial strategy so that it fits with your capabilities to pay.

Do it yourself. If you think you can handle your financial affairs, then go for it. Create a practical and realistic budget that will allow you to pay your debt and at the same time, pay for your day-to-day living expenses. Any unnecessary spending should be curtailed. If you have a problem with self-discipline, you can avail of automatic payments offered by your bank so you will not be tempted to deviate from your plan.

Debt Settlement. You can do this alone or with the help of a third party such as a debt settlement agency. Your agency can negotiate with your creditors to reduce your balance to as much as 50%, making your monthly payments easier to handle. Most credit companies would prefer to see you pay your debt than write if off their statements as a bad debt.

If you've had this debt for a long time, it's probable that a big part of it comprise of accumulated interest.Debt Consolidation. The purpose of debt consolidation is to actually reduce the interest of your debt and lower the total debt amount. If you have multiple debts at different interest rates, these can be consolidated into a single amount at a lessened interest.

For example, you may have a bank loan of $2500 (at 14% interest rate), a credit card balance of $800 (at 13% interest rate), and a store card balance of $500 (at 10% interest rate). The total of $3800 can be paid at a negotiated interest rate of 9%.The best part is this method is that you can also negotiate with your creditor to deduct any accrued interest and other charges you may have incurred.

If your creditor is amiable to this arrangement,you may have cut your debt to as much as 40%.You only need to give one single payment to the Consolidation Company every month. It's up to them to pay your creditors. They can also help you set up an emergency fund to lessen your chance of missing on payments.

Home Equity Loan. Loan using your house as collateral and use the money to pay off all your debts. This will help eliminate the high interest cost of your debt and freeze the total amount. However, do your homework first before applying. The total cost of the loan including the interest should be lower than your present debt. Make sure that you can chalk out the monthly payments.

Otherwise, you risk losing one of your most important assets: your home.Borrow from your Credit Union. They usually have lower interest rates. If you are not a member, find out from your employer if you are eligible for one. This kind of loan usually offers low interest rates and thus, easier to manage.

Life Insurance. If you have a life insurance policy, you can borrow against it solve your debt problems. This loan need not be repaid. Any amount you borrow plus the accumulated interest will be deducted from your life insurance benefits. However, it is better to repay it for the sake of your beneficiaries.

Another way is to borrow against your retirement plan. Find out from your employer if you are allowed to do this.Credit Cards. Shop for a lower rate. If you have multiple credit cards, choose one that offers the lowest interest rate. Consolidate. Ask the card-issuing bank if they can offer you a low, fixed interest rate if you can transfer your balances from your other credit cards.

Bankruptcy. Whatever your financial troubles may be, this should be your very last resort. At best, it is just a short-term solution. It may seem an easy way out but in the long run, it will have a negative effect on your credit standing for years to come and makes you a poor credit risk. When you apply for bankruptcy, your assets are assessed, liquidated, and used to pay your outstanding debt.

You may lose valuable properties that you might have been able to keep. If you are a business owner, bankruptcy can ruin your chances of making your company grow since you will be ineligible for business loans. Do not file for bankruptcy unless you've exhausted every means available.