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Debt Problems &  Your 10 Options for Debt Help
Call Today: (877) 274-1260
If you successfully complete our program, it’s possible that you’ll enjoy these benefits:
Settle your debts for less than you owe
  (read here for full details about how much you can expect to save)
Resolve your unsecured debts in 18 to 60 months
  (read here for full details on how long our program lasts)
No Up Front Fees - Don't Pay Till You See Results!
Debt Problems -   Your 10 Options for Debt Help

Because the nature and severity of every debt problem is so different, it should come as no surprise that not everyone needs the same solution. The purpose of this article is to briefly summarize the 10 most popular options for debt help, so you can get a better idea of what solution is appropriate for you.

For people whose problems are not very severe, do-it-yourself solutions like the Debt Snowball, the Debt Avalanche, or borrowing from a retirement may be appropriate. You may also want to consider a debt consolidation loan or credit counseling, which can reduce your interest and to a lesser degree your monthly payments. For consumers who need more relief in terms of their monthly payments, the best options to consider are debt settlement and bankruptcy ? preferably Chapter 7 but in some cases Chapter 13.

Quick links:

The Debt Avalanche

The Debt Snowball

Borrowing from a retirement account or life insurance policy

Borrowing from a family member

Secured debt consolidation loans

Unsecured debt consolidation loans

Credit counseling

Debt settlement

Chapter 13 bankruptcy

Chapter 7 bankruptcy

The Debt Avalanche

With the Debt Avalanche method, you will work to pay off your debt with the highest interest rate. This is because the higher the interest rate, the more money wasted. Once you have paid off the debt with the highest interest rate, you will move on to the debt with the next highest interest rate, moving in an avalanche type movement. Attacking the debt with the highest interest rate is the most popular and oldest solution for getting out of debt, but it is only appropriate for people who can currently afford their payments.

The Debt Snowball

For those who need to see results quickly, there is the Debt Snowball. This is where you will pay off the smallest debts first, seeing the immediate results. You pay off the next smallest debt with the money saved from paying off the previous debt. You continue to move up the debt balance, building a little "snowball" of sorts. This method is popularized by Dave Ramsey, the AM radio host, who argues that getting out of debt is purely psychological, and if one is serious about doing it, they need to see progress.

Borrowing From a Retirement Account or Life Insurance Policy

As your retirement or life insurance policy cash value builds, so does your ability to pay off some lingering debts. For people with debts that have adequate cash value in their life insurance policy or savings in a retirement account, they can withdraw funds from them or borrow against it to pay off any outstanding debt. Of course you?ll have to pay back the loan with interest, but it is usually much less than what you would pay to a financial institution. Keep in mind that if you cannot borrow against an IRA, but you can withdraw from it, though you?ll pay penalties if you withdraw from it before you are 59 and ? years old.

Borrowing from a Friend or Family Member

It can be a little hard to ask a friend or a family member whether you can borrow some money, but if they know your situation, those who have extra savings may be willing to share it with you to help you out of jam. Just be sure to come to an arrangement to pay them back that is comfortable for the both of you. The last thing you want is have a financial issue spoil a good relationship.

Secured Debt Consolidation Loans

With a secured debt consolidation loan, you agree to using some sort of tangible property as collateral should you default on the loan. Most likely this piece of property is your house and the loan is a home equity loan. The interest rates for home equity loans are among the lowest available and the payment terms can be stretched out to give you relief on a monthly basis. That said, these loans usually require a good credit score and sufficient equity in your home (20% in most cases). Not only have most people with debt problems exhausted their home equity, but many lack the credit score to obtain a loan because they have too much debt.

Unsecured Debt Consolidation Loans

With an unsecured consolidation loan, you receive a loan from a bank that is used to pay off all or some of your outstanding bills, and in turn, you now have only one single outstanding debt obligation each month ? the loan. Unlike secured consolidation, you do not use a piece of your property as collateral to secure the loan, and therefore, the only negative effect of non-payment is your credit score will be damaged. This gives greater risk to the lender, however, and as a result, they usually require you to pay higher interest.

Credit Counseling

In order to be able to look at your debt problem in a new light, you might consider credit counseling. Most credit counseling agencies are non-profit and can review your budget and offer free financial tips for a small fee. In some cases, they may suggest you enroll into a debt management plan (DMP), where they work with your credit card companies to reduce your interest rate, waive late fees, and help you repay your debt in 4 to 5 years. The payments for these plans can be quite high however, and ironically, the credit card companies only approve clients who exhibit that they have limited disposable income.

Debt Settlement

With debt settlement, you are usually contacting your creditors individually in order to negotiate a settlement that you can both agree on. A settlement is an agreement where in exchange for compromising a portion of the debt you owe, you agree to pay your creditor off with a lump sum payment. In order to qualify for a debt settlement arrangement, your accounts must be past due at least 4 to 8 months. On the bright side, this gives you ample time to save funds in order to accumulate a lump sum to offer. Less positive is the fact that it will have a negative effect on your credit to default on your payments.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a debt repayment plan set forth by the courts. You still owe the debts. However, the court stops all legal action, including repossession and foreclosure. These plans usually last 3 to 5 years and your debts, or a portion of them, are repaid from your monthly disposable income, which is determined by the court. The payment requirements for these plans can be very strict, which makes them difficult to complete. Just 33% of Chapter 13 bankruptcy plans are ever completed, which means you could have a bankruptcy on your credit score and still owe the debt.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is one of these worst marks a person can have on their credit score and it stays on your credit report for 10 years. In theory, you will also have to sell your assets in order to pay your creditors, but in reality, very few consumers with debt problems that are serious enough to consider Chapter 7 have assets. If they do, chances are the assets they do have ? probably their home ? are protected to some degree by their state?s exemptions. While Chapter 7 may not be appropriate for people who do not have significant debt concerns, it is a great option for those who do because they can wipe their slate clean quickly and effectively.

As you can see, there are many debt help options for you to review. The sooner you start exploring some of these options further, the sooner you will once again be financially sound.


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