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Debt Help could you learn how to stay out of debt?

A variety of debt help programs are available to consumers who find themselves struggling with personal finances. From credit counseling to debt settlement and consolidation loans to bankruptcy, there is some form of debt help for nearly every type of financial situation. Sorting through the various types of programs and services can be a bit overwhelming. This article provides a brief overview of various debt help options and includes links to additional information.

Budgeting is the "self-help" program for debt help. It requires debtors to thoroughly review income and expenses and develop a financial plan. If you are spending more than you earn, it's time to pinpoint unnecessary spending and eliminate it

Daily living expenses are a huge portion of budgeting, yet few people consider the small amounts of money they spend each day. A cup of coffee, fast food lunch, weekly dinner at your favorite restaurant and movie rentals can take a huge chunk out of your budget.

An associate of mine was facing foreclosure and forced to review her finances. She was shocked to discover she was spending nearly $900 a month on "little" things. By eliminating these impulse buys, she was able to save her home and is on track to pay off her mortgage early.

Budgeting is my number one pick for debt help. It doesn't cost a dime and only requires the development of a plan. Obviously, you need to follow the plan in order to accomplish your goals.

If you aren't able to create a budgeting plan and stick to it, consider obtaining credit counseling. This involves paying a credit counselor to educate you about finances. Counselors will help you devise a workable plan and negotiate with creditors to reduce outstanding debt balances.

Should you be forced into bankruptcy at a later date, you will be required to obtain credit counseling prior to petitioning the court. If you feel there is a possibility of bankruptcy in your future, a list of approved credit counseling agencies and debtor education providers can be found at the U.S. Trustee Program website managed by the Department of Justice.

Debt reduction programs offer an alternative to bankruptcy and are ideal for people financially over-extended. Debt management plans are oftentimes offered through credit counseling agencies. Counselors negotiate with the debtor's creditors to establish an alternative repayment plan.

Debtors are required to open a deposit account managed by the debt management provider. Funds are then distributed to creditors until accounts are paid in full. Generally, there is a startup fee and monthly fee paid to the debt reduction provider. The fee is usually a percentage of the total amount of outstanding debt. Fees should never be higher than 15-percent. If they are, it is time to locate a different debt management provider.

Debt consolidation can solve debt-overload; however, careful consideration should be given to this type of debt help. In many instances, debt consolidation requires debtors to own a home. Using the equity in their real estate, homeowners take out a second mortgage note to pay off credit cards and outstanding debts.

Considering the current mortgage crisis, obtaining home equity loans will be exceeding more difficult to obtain. Secondly, are you certain you want to expose your home to the possibility of foreclosure in order to pay off debts? Third, home equity loans are repaid over a period of 10- to 15-years. In the long run, debt consolidation may end up costing more than it's worth. Use caution and understand the risks involved.

Debt settlement offers debt help by negotiating with creditors to significantly reduce outstanding balances. Generally, debt settlement is conducted through credit counseling agencies or attorneys. In some instances, debtors can achieve successful negations on their own. However, some creditors won't budge unless you hire a professional to assist in negotiations.

Should you decide to approach creditors, it is best to be prepared with an upfront cash offer and reasonable repayment plan. If creditors reject your offer, you can always turn to professional debt settlers for further assistance.

Bankruptcy should be the last option you seek for debt help. Filing bankruptcy costs money and usually requires the assistance of a bankruptcy attorney. While it can eliminate debts, it can stay on your credit report for up to a decade. Before taking this drastic measure, be certain you fully understand the pros and cons associated with bankruptcy.