How To Go About Digging Yourself Out of Debt

Debt is scary and can be hard to face alone. Often, turning to a financial institution or third party for help can make a big difference in ridding yourself of debt faster. Be sure to research your options and reach out to multiple firms for consultation before making a decision.

Management

If you’re having trouble juggling multiple debt payments from different sources, a debt management plan may be for you. This type of plan consolidates all of your debt, so you only have to make one monthly payment to a third party like Rescue One Financial. It’s also often possible to renegotiate your interest rates. You will still be on track to pay back 100% of your original debt.

Resolution

Debt relief is possible for those whose debt is unexpected or due to financial hardship. Again, a third party consolidates your debts into one monthly payment. However, future interest is eliminated and the balance owed is also reduced. It is common to see debts decreased by as much as 60% under a debt resolution plan. This plan should not affect your credit rating.

Settlement

When further payments on your debt are no longer possible, you may start to think about debt settlement. This is a situation in which creditors negotiate with debt settlement firms on a lump sum amount that is significantly less than your original debt. Settlement only applies to unsecured debt, like credit card debt. To make this payment you would open up a new savings account into which you would make regular payments. Once the amount is enough, the lump sum would be accepted to pay off your debt. This process can take a long time.

Especially in today’s economy, dealing with debt can be more difficult than ever. You may need to turn to outside help to start to make a dent. Luckily, there are lots of different options for every type of budget and situation.