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How to Settle Debt

How to Settle Debt Photo

 

Burying yourself on debt is a situation you never would want to encounter. You do not only experience financial crisis but also emotional and social trauma as well. What would your friends tell you when you are financially incapable? Do you have someone to turn to when the situation arises?

According to Consolidated Credit Counseling Services Inc., the total US revolving debt as of May 2011 is $798.3 billion. And 98% of that is made up of consumer credit card debt. It cannot be denied that credit card use is part of the American lifestyle. Yet, settling personal debt continues to go higher and higher every year. When one goes through debt problems, how does one manage to get out of the trap?

Find means to pay

Before worse comes to worst, when you know you have debts to settle, plan out as early as you can. Do not have a mentality of meeting the deadline. You will never know when unseen circumstances may come when it comes to financial matters.

If it’s possible, pay your balances monthly or even weekly. Get it scheduled on your calendar as to when you are going to pay your bills. Learn how to organize your bills every day. When you see you are spending much than you earn, learn to control your expenses. Don’t deal on things you want, deal on things you need.

If you are in too much debt, find means to earn more money to pay your bills. Do a part-time job if you can – just anything legal that will give you additional income to sustain your financial problems.

Debt collection agency

One can go to a debt relief agency if you feel the need of settling your debt. These agencies will be the ones to mediate between you and your creditor about your balances. Usually, they would ask for documents or papers regarding your settlement and negotiate with your creditor. A percentage of the balance may be required for you to pay.

Sometimes, one might have the need to go through an insured financial institution and deposit payments there. You would not want to go through the process when your creditor sues you in court as you may need a debt relief export. They will be the ones to defend for you on your case.

Consider debt consolidation

You can opt to pull together all your debts as one through a loan. This will minimize your problem on having to think too many settlements on which debt are you going to pay first. With a loan, you only got to focus on one payment.

Usually a home equity loan is used. This means that your house will be on the line if you are not going to pay your debts as discussed. You may have a negative record on your credit card report but it will increase in due time once you are able to pay.

Declare bankruptcy

When all else fails, you might stick to a last resort of bankruptcy. When you declare bankruptcy, this would involve a legal court to assess your assets to be paid to your creditors. You may lose everything if the court says that all your assets are worth all your debts.

Yet, declaring bankruptcy is not an assurance that you will be cleared from all your debts. The court may sometimes just declare you to have paid only a percentage of your debt. Or it may forgive you for the whole debt you have made.

Debt may be a good thing or a bad thing, all depends on how you use the money for. Still, when one goes through solving your debt problems, you should know the consequences you have to pay if ever you don’t go pass through debt settlement.