Are you facing overwhelming debt? Are you worried that the creditors might take foreclosure or repossession action? No matter how much you try to manage your finances, it looks like your dues will never end.
Perhaps, it might leave you wondering if there is any way to pay off all the debt or improve your current situation. Fortunately, you can break free from your financial burden and start afresh with some debt relief options. But first, let’s understand what debt relief is.
Debt Relief:
It refers to the measures that help reduce or refinance the overall borrowing so that the indebted person can repay it easily. It might include reducing the interest rate, lower payment schedules, wiping out debt in bankruptcy, or persuading the creditors.
Note: Debt relief can be a risky option if you are not well informed. Some companies might try to take advantage of your current situation to scam you. Therefore, it would be better to consult a lawyer before selecting your options or signing any document.
Options Available:
- Bankruptcy
Every person is well versed with their financial situation. So, suppose you are in a situation where you know that it’s impossible for you to pay the borrowed amount. In that case, you can consider the option of bankruptcy.
The most common form of bankruptcy is liquidation. It can help you pay off unsecured personal loans, credit card bills, or medical expenses. However, the bankruptcy law and exemptions vary from state to state. For instance, if you live in Los Angeles, the bankruptcy lawyer los angeles can help you with filling under chapters 7 and 13. Likewise, the lawyer from another state will be familiar with their bankruptcy laws. Therefore, before you make any decision, you need to consult the lawyer in your state.
- Debt Management Plan
The option of the debt management plan is good if you think you can repay the amount borrowed, however, with fees waived. Generally, people make a single payment every month to the credit counseling agency. They distribute the amount among all the creditors (usually includes credit card companies) until it’s all settled.
Fortunately, this option does not impact your credit score. However, you need to make regular monthly payments. Otherwise, it can affect the whole plan, making it challenging to apply for credit again.
- Debt Settlement
Debt settlement is the last option available to you if you can not qualify for bankruptcy. In this situation, debt settlement companies ask you to stop paying the creditors. Instead, you need to deposit money into the account they control. Once the amount is appropriate, they’ll contact the creditor and pay them.
However, this process can take years to complete. Moreover, it will have no control on the collection calls or penalty fees. Therefore, before you select this option, consider bankruptcy and contact a lawyer.
The bottom line
The reason that you couldn’t pay off your debts could be anything. However, it is essential that you take appropriate actions to break free from the current situation. Hopefully, the measures written above might help reduce your financial burden.