Debt Solution

With the various options a debtor has in this era, debt solution is an easier task now. There are numerous ways to fight your debts and win over them. With planned and calculated move, better days are not far away. This is, however, dependent on the amount and the type of debt you are undergoing. The twelve most popular ways of debt solution are:

• Self Repayment Plan
• Debt Settlement
• Debt Consolidation
• Debt Consolidation Loan
• Credit Counseling
• Cash out Refinance
• Retirement Benefits
• Credit Union
• Home Equity loans
• Insurance
• Credit Cards
• Bankruptcy
  
  These are 12 golden guidelines to solve your debts:
  
  
• Self Repayment Plan: The ideal way to start your debt solution program is with the self repayment plan.You can do it yourself without the help of any debt consolidation company. With calculated steps you can overcome your debt problems within a considerable time period. Budgeting is also a very important aspect in the self repayment plan. Make a budget plan and curtail any unnecessary expenses. If possible, you might also consider a part-time job. These funds can be utilized in your repayment plans. If personal discipline is a problem you can set up direct payroll deposit and automatic payments with your bank. You will have no choice but to follow the plan.
  
  
• Debt Settlement: With debt settlement, a third party or you yourself negotiate with your creditors to reduce the debt amount. Debt Settlement agencies work with your creditors to reduce your debt balance, sometimes by as much as 50-75%. Most debt settlement companies are transparent about their fee structure but you are advised to check out if there are any hidden fees involved in the settlement process.
  
  
• Debt Consolidation: Debt consolidation is a very beneficial process to solve your numerous debts. Here your multiple debts are consolidated into a single amount. On approaching a debt consolidation firm the consultant first analyses your present debt amount. The debt consultant then negotiates with the creditor on your behalf and reduces your debt amount to around 30%-60%. In most cases interest rates are reduced. Late fees and hidden taxes are also waived at times. The revised consolidated debt amount is divided into easy monthly installments that make your repayment plans much easier.
  
  
• Debt Consolidation loan: The debt consolidation loan helps you in combining all your outstanding debts in one loan account. For example, you may have an existing loan with a balance of $2,500 (15% interest rate), a credit card balance of $1,000 (12% interest rate) and a store card balance of $500 (10% interest). These could all be consolidated into one loan of $4,000 (8% interest). The purpose is to actually reduce monthly repayments. Either the interest rates are lowered on the new loan, or the repayment period can be extended.
  
  
• Credit Counseling:Credit counselingagencies help you to be debt free, but basically they don't consolidate your debt. They will work out payment plans with lower interest rate and fees for your outstanding debts. You'll make one monthly payment to the counseling agency, which will pay all your creditors. Credit counseling programs usually does not hamper your credit rating. If you stick to the plan, it is possible for you to be debt free in three to six years. Careful measures are required while choosing the agency.
  
  
• Cash out Refinance: In this process it is required to refinance your home and pay your outstanding bills. It also helps you to tap the equity of your home. Refinancing at a lower interest rate, will help you to eliminate the high interest costs of the debts you pay off. You can even chalk out a lower payment plan compared to the present one. You need to have a clear understanding of the total cost of refinancing.
  
  
• Retirement Benefits: If you have a 401(k), plan or certain types of pension plans, most employers allow you to borrow against your retirement account. Borrowing is a better option when compared to withdrawal of money from your account. This will save you from paying extra taxes and a 10% penalty. If you can't pay it back within five years, the IRS will assess taxes and penalties. In case you lose your job, you have to pay back the loan immediately and pay taxes for pre-mature withdrawal of money. This type of loan offers low interest rates and is much easier to handle.
  
  
• Credit union: Credit unions generally have lower interest rates and fees on loans. If you're not a member, check with your employer, or organizations of which you're a member and find out if you're eligible to join one.
  
  
• Home Equity loans: Home equity loans allow you to borrow against the value of your home, without any other mortgages. It is a fixed amount of money for a particular time period. In most cases these loans offer attractive rates and low payment schemes. The interest is usually minus tax if you itemize. However, interest rates are often variable, and there is a risk of losing your home if you fail to pay.
  
  
• Insurance: You can borrow from the life insurance policy at a very low interest rate in order to solve your debt problems. The most advantageous thing is that, you do not have to repay this loan. Your life insurance benefits will be reduced by the amount you borrow in addition to any accrued interest.
  
  
• Credit Cards: Using credit cards is advantageous from the point that with a good credit rating, you may get a much lower rate when compared to other forms of consolidation loans. Contact your current issuer to ask what interest rates they will offer you if you transfer balances from other cards over to theirs. Request for a fixed rate and if they agree, request them to waive any transfer fees. If you can't negotiate a low rate with your current issuer, try shopping for a new card. Once you do consolidate this way, be sure to set up an optimal payment plan so that you can be free of debts within 3 to 5 years.
  
  
• Bankruptcy: Bankruptcy should be your last option in the journey towards debt solution. Sometimes when financial pressures are enormous and you fail to meet ends, you might have to file a bankruptcy. It is a temporary relief under the debt burdened conditions. Bankruptcy creates a negative impact on your credit report for the coming ten years and marks you as a bad applicant for future job prospects and loans. The two types of bankruptcy that are most popular are: Chapter 7 and Chapter 13. The first priority of a debtor is to try out the above mentioned ways and avoid bankruptcy rather than filing it.
  
  Following the above methods carefully will give you a debt free life, a secured bank balance and peaceful nights away from the harassing phone calls from the creditors. Bank on us and we will give you the fastest, safest and smartest remedies of debt solution.