Get Out of Debt Before Foreclosure or Bankruptcy.
Struggling to get out of debt? If so, you aren't alone. Millions of Americans are drowning in debt. They are overextended to the point of filing bankruptcy or losing their home to foreclosure. People are losing their jobs, their homes and struggling to put gas in their tank and food on their table.
There are many ways to get out of debt. However, in order to be successful, you must have a strong desire to put forth the effort it takes to eliminate debt once and for all. The sad truth is many people have no idea how to manage their money. They live paycheck to paycheck and have no money left at the end of the month. If one unexpected expense arises, it can take months for them to recover and get back on track.
Many people find credit counseling to be a useful tool in regaining control over finances. Individuals considering bankruptcy are now required to undergo credit counseling through an agency approved by the U.S. Trustee Program. The new bankruptcy laws enacted in 2005 have made filing bankruptcy considerably more difficult and place numerous restrictions on consumers.
If you are considering bankruptcy as an option to get out of debt, experts suggest receiving credit counseling from one of the approved U.S. Trustee agencies prior to filing personal bankruptcy. Typically, a fee is charged; however, non-profit credit counseling agencies use a sliding scale and charge fees according to the debtor's income to expenses ratio.
Credit counselors are trained to review personal finances and help debtors understand how to better manage their money. In some instances, counselors are able to negotiate with creditors and reduce interest rates, eliminate late fees and negotiate outstanding balances.
Budgeting is one of the most cost-effective ways to get out of debt. Dave Ramsey is a leader in the finance industry and offers quality information on household budgeting and personal finance. Ramsey offers sound advice on how to eliminate credit card debt, create a realistic household budget and save for your future.
Budgeting does require self-discipline and dedication to get out of debt. The first step requires creating a list of all income and expenses. A large majority of people do not know where they are spending their money. If you fall into this category, a simple way to track expenses is to carry a notepad and document every penny spent. You might be shocked to discover how much money you are wasting on trivial items you really don't need.
Debt consolidation loans are a get out of debt option for homeowners. Also referred to as home equity loans or home equity line of credit loans (HELOC), debt consolidation loans use the equity in your home as collateral for the loan. The proceeds of the loan are then used to pay off all other outstanding loans.
While debt consolidation loans can help reduce monthly payments, there are drawbacks to this type of financing. First, debt consolidation loans are generally paid over a period of ten to fifteen years while unsecured notes are usually paid over a period of three to five years. While you will pay a smaller monthly payment, over the long-run you will be paying considerably more interest. Additionally, debt consolidation loans can place your home at risk for foreclosure if you are unable to maintain the monthly payments.
In today's recessed economy it is more important than ever to take control of your personal finances. Take time to conduct research online to discover the various get out of debt options. We encourage you to begin by visiting our blog article database where you can learn about debt consolidation, debt management, debt settlement, budgeting, credit counseling, personal bankruptcy and more.