Debt - Ten ways to get out and stay out of debt

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Getting help with bad credit
Getting the bad credit help that you need is quite hard. First of all, it is embarrassing and difficult to admit that you need help managing the debt and credit problems that you have. Whether or not you are to blame or whether or not you could do anything about it, really doesn't matter now. Now, what you need is a solid bad credit help. Unfortunately, many people, of all sorts, take advantage of... Read debt consolidation article



How to rebuild credit for cheaper borrowing in the future
Rebuilding your credit can be a great technique to take control of your future. Face it - to live in today's world, you need access to credit, and you need it cheap. Unfortunately, lots of people have ruined their credit because of hard times or bad decisions when they were young. There's still time, however, to put things right, no matter how far in the hole you are. First, you should ... Read debt consolidation article



Debt - Ten ways to get out and stay out of debt
1) Use your Assets If you have assets with some significant equity, such as a home or a car you may be able to use these to get control of your debt. For example, you could get a loan on your home sufficient to pay off your debts. You could be saving a considerable amount of money on interest if you pay off high interest credit card debt in return for lower cost debt.

If you have a car, consider selling it, paying off your debts and buying a cheaper car. Be careful though! Your don't want a "cheaper" car that will cost you a fortune in repair costs.

2) Get a Second Job Use the money from this job to only pay off your debts. List your debts noting the interest rates. Pay off the debts with the highest rates first and work your way down the list.

3) Put your Credit Cards on Hold One of the best steps you can take to get out of debt is to immediately stop using credit cards. At the very least destroy all your cards keeping just one card for emergencies.

4) Set up a Repayment Plan Cut back on your expenses and/or use freed up cash to pay down your debts. Pay off the debts with the highest rates first and work your way down the list.

5) Get a Consolidation Loan A consolidation loan can make lots of sense. Get a loan to pay off all your many debts and have just one payment to make. The new loan usually has a smaller payment and a lower interest rate.

6) Use the Services of a Credit Counselor There are two types of credit counselor, for profit and "nonprofit". We do not distinguish between the two as they provide similar services and both charge a fee. Credit counselors can assist you in acquiring the discipline you need to get control of your debt. Be careful! Many people do not fully understand all the ramifications involved such as:

Impact on your credit rating

The credit bureau will record that a plan is in place.

Are your payments too high?

Your payments should be high enough to significantly reduce your debt but not so high that you have "no life". If you do not have money left over at the end of the month to pay for the small pleasures in life you may find that you end up defaulting on your payments.

For how long should you pay?

Most experts feel that the term should be three to four years. It is a stipulation in the new Bankruptcy Reform Bills that the term be 3-5 years. Terms longer than this have a very high failure rate, because people cannot see a "light at the end of the tunnel".

7) Informal Proposal - Payments over time. In some cases you can make a proposal to your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.

8) Informal Proposal - Lump sum payment. You may be able to pay less than 100 cents on the dollar. For example, a relative may be willing to pay a lump sum to the creditor of say 50% of the amount owed in order for the balance of the debt to be written off. Your creditors will be more willing to accept this offer rather than have you file Chapter 7.

This works best when there are few creditors.

9) Chapter 13 Bankruptcy You are probably a good candidate for Chapter 13 bankruptcy if you are in any of the following situations:

1. You have a sincere desire to repay your debts, but you need the protection of the bankruptcy court to do so. You may think filing Chapter 13 is simply the "Right Thing To Do" rather than file Chapter 7. 2. You are behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy. 3. You need help repaying your debts now, but need to leave open the option of filing for Chapter 7 bankruptcy in the future. This would be the case if for some reason you can't stop incurring new debt. 4. You are a family farmer who wants to pay off your debts, but you do not qualify for a Chapter 12 family farming bankruptcy because you have a large debt unrelated to farming. 5. You have valuable nonexempt property. When you file for Chapter 7 bankruptcy, you get to keep certain property, called exempt. If you have a lot of nonexempt property (which you'd have to give up if you file a Chapter 7 bankruptcy), Chapter 13 bankruptcy may be the better option. 6. You received a Chapter 7 discharge within the previous six years. You cannot file for Chapter 7 again until the six years are up. 7. You have a co-debtor on a personal debt. If you file for Chapter 7 bankruptcy, your creditor will go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments. 8. You have a tax debt. If a large part of your debt consists of federal taxes, what happens to your tax debts may determine which type of bankruptcy is best for you.

10) Chapter 7 Bankruptcy If these alternatives will not work for you, bankruptcy may be the only way for you to get a fresh start. Chapter 7 Bankruptcy offers a quick solution to getting out of debt.

Nathan Dawson writes for http://www.mybankruptcycounseling.com

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Reduce debt - 5 secrets you must know

It's never pleasant to realize that you're in financial hot water, but pretending the situation doesn't exist is NEVER the way to deal with the problem. If you're having trouble meeting monthly payments, find yourself borrowing or using credit cards to meet daily expenses, or have one or more of your credit accounts turned over to a collection agency, it's time for you to get proactive and bring your debts back under control. Below you'll find five ways to reduce your debt. Some take time, all take some level of commitment and effort - but it's worth putting in the time to start cleaning up your debt situation.

1. Develop a budget - and stick to it. The first step toward getting control of your finances is to realistically assess your situation. Sit down and draw up a budget that takes into account all your income and expenses. First, list all your income. Next, list each of your 'fixed expenses', the ones that don't vary from month to month. Those may include your rent or mortgage payment, your auto loan payment, and your utilities if you're on a budget plan to pay for them. Next, add in necessary expenses and payments on bills that vary from month to month. Finally, list all your daily and regular expenses for entertainment, transportation and the like. Your goal is to develop a budget that lets you meet all of your monthly fixed expenses, and figure out where you can cut expenses to start paying down your credit card and other debt.

2. Contact your creditors. Communication is one of your best tools to help you through difficult financial times. Your creditors would really prefer NOT to take stronger measures to collect the money that you owe them. After all, it costs them more money to refer your debt out to a collection agency. As soon as you know that you're having trouble making ends meet, call your creditors and explain the situation. In most cases, they'll be happy to work out a modified payment plan that will make it easier for you to meet monthly expenses. It may mean extending the period of your loan, or renegotiating the terms of a loan agreement, but in the short run, it will take the heat off and in the long run, it will save your credit rating.

3. Pay down your highest interest loans. Pick and choose among your credit card payments and loans. While it's generally not a good policy to pay only the minimum payment on credit cards and revolving loans and lines of credit, there is one exception. If you have one or two high interest outstanding loans, one of the better ways to get control of your debt is to eliminate them as quickly as possible. By meeting the minimum payments on other debts for a few months, you can concentrate on bringing the balance down on your most expensive loans.

4. Transfer your balances to lower interest loans and lines of credit. If you have outstanding debt in high interest loans and credit cards, your finances can benefit from moving the balances to a lower interest credit card. Credit cards with 0% introductory rates for six to twelve months are widely available right now, as are low interest balance transfers. Take advantage of one to transfer a high interest loan and pay it down during the introductory period.

5. Get a debt consolidation loan. A debt consolidation loan makes sense if you are paying on several different debts with varying interest rates. By taking out a home equity loan, second mortgage or other secured loan in the amount of your total debt, you can pay off all your other creditors, and have one monthly payment to deal with. By using a home equity loan to consolidate your debt, you take advantage of a longer payment term and lower interest rates to bring down your monthly payment and free up your resources for savings and other investments.

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk.


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Debt - Ten ways to get out and stay out of debt
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