You may face debt problems at some point in your life even if you have been managing your finances well. It may be that you have experienced a financial hardship or some other financial emergency. However, when you are neck deep in debt, all you want is suitable ways to resolve it. Here are some debt resolutions options, some of which you can do on your own and some are of with professional help.
DIY debt resolution options
Here are 3 debt relief strategies by following which you can get out of debt on your own.
- By transferring your credit card balances – If you have multiple credit card balances, then you can think of transferring your high interest balances to a card with a lower balance. However, you need to first ensure that there is enough credit limit on your lowest interest card. You can also take out a low interest card for the purpose, but you need to repay the debt within a definite time period, after which the interest rate usually gets increased.
- Through debt snowball strategy – This is a strategy which will help you if you want to motivate yourself to repay all your debts. In this strategy, at first, you may the minimum on all your cards and then make extra payment towards the card with the lowest balance. After you repay the dues on this card, you target the next one with the lowest debt. This way, you can pay off all your debts, from lowest to highest.
- By following debt avalanche method – If you want to save on interest payments along with paying back your debts and you’re already motivated to pay them off, then this may be the right method for you. In this, after making minimum payments on all your cards, you make the extra payment to the card with the highest rate of interest. It may take a little longer to repay the dues on that card since the balance is usually more on the card with the highest interest but you can save significant dollars on interest payments. Once you repay the card with the highest interest rate, you continue the same strategy with the next highest rate card.
Debt resolution with professional help
If you think that professional help is what you require, then you can contact consolidation and/or settlement companies to help you pay back your dues.
- By enrolling in a consolidation program – A consolidation program can help you if you’re struggling to repay your multiple credit card debts. When you enroll in such a program, the company decides upon a payment which you need to pay every month. Side by side, it also negotiates with your creditors to reduce the interest rates on your cards, so that it becomes easier for you to repay your debts. Once you make payment every month, the consolidation company makes the agreed upon payments to the creditors, and you get rid of your debts after a certain time.
- Through a debt settlement program – A debt settlement program can be right for you if you are not able to repay your debts in full. In such a program, the settlement company analyses your financial condition and decides upon a payment which you need to pay every month. The amounts you pay get deposited into a settlement account. The company also negotiates with your creditors to reduce the payoff amount and once they decide on a reduced payoff amount, the settlement company uses the settlement funds and usually makes one-time payment to the creditor; and one by one, you get rid of all your debts.
When you are dealing with multiple debts, you need to maintain patience since the problem cannot be resolved overnight. You need to employ a suitable strategy or a combination of strategies as per your financial condition. Once you make your own debt resolution option and start following it, gradually you will be able to overcome your problem and will get your financial life back in order.