Getting Out Of Debt, Without Winning The Lottery

Everywhere one looks, there are consumer products vying for our attention. Credit facilities in the form of credit cards as well as in – house retail accounts have made it virtually possible for anyone to purchase goods of choice to their heart’s content. While this has enabled a lot of individuals to improve their state of living, it has also opened the doorway to unchecked spending, usually beyond people’s means or incomes. The result has been high levels of unpaid debt and nagging interest rates. For those indebted, the situation may seem terminal and never ending but there are some options that the average person can take to combat the debt cycle.

The first option available to people inundated by credit is debt consolidation. This is essentially a process by which someone heavily indebted takes out a loan to pay out the existing credit. This finance tool, called a debt consolidation loan, may seem counter – productive, after all, why get into further debt to pay off existing debt. The key however lies in the priority system linked to this method. All the debts that a person has are grouped into one [through the loan] and then paid off systematically over a designated period. This method has proven to work for most people who don’t have astronomical credit amounts.

Another option is to go with debt management. This is a program that is set up to assist indebted individuals renegotiate payment plans that may be a bit more workable with their current creditors. In this case the first step is usually to get ‘credit counseling’ in which one learns about the pitfalls of credit purchases and how to manage them. After this, a package that takes into consideration the amount of debt and the person’s income is put together.

For those looking for a more radical route, debt settlement may be the way to go. In this case, the debtor basically communicates to the creditor that they cannot fulfill their credit commitment but are able to pay off a fraction of the debt, if the lender is willing to write off the whole credit amount. This may have dire consequences on one’s credit score, but in some cases it may be the only option. Once one has decided to go this way, they may look to settle with the lender individually or seek a debt management company to mediate throughout the process.

Leave A Comment...

*