Monday, May 27, 2013

Simple truths to effective debt relief

There are many ways to get out of debt. The obvious solution is to pay off what you owe. However, some people need help doing that so they opt for debt relief programs that will make the whole ordeal easier.

Unfortunately, there are people who go through debt relief but do not come out victorious. If you want to avoid being part of this statistic, you may want to consider three simple truths about debt relief.

First truth is that you need to know the right debt relief for your unique financial situation. There is no one formula to get out of debt and if you really want to be successful in the endeavor, you may want to choose the perfect solution. There are two considerations in making this choice: the type of debt that you owe and your capabilities in paying it off.

If you are looking for professional advice to help give light to your debt situation, credit counseling is a great place to start. However, this is only for those who have enough income to cover the minimum of your debts.

If you want to organize your credits into a single payment, then debt consolidation loan is the right program for you. You will benefit from a lower and single monthly payment plan - at least if you got a low interest loan.

If you have a bad credit score or no collateral to get that type of loan, debt management is also another option for you. You will work with a debt professional who will help manage your debts.

These three will not reduce your debts so you need a steady income. Also, know that debt management usually works best for credit cards, medical bills, and other unsecured loans. Debt consolidation loans and credit counseling can accommodate both secured and unsecured loans.

If you need a bigger reduction on your debt because your income hardly has enough for debt payments, you may want to opt for debt settlement. This is only good for unsecured loans, credit card debt and medical bills. This involves convincing your creditor that you are in a financial crisis so they will allow you to pay only a portion of your debt and have the rest forgiven.

If you have trouble getting an income and your can barely keep up with your basic expenses, you may want to consider declaring yourself bankrupt instead. Here you will either have your debts discharged or paid off through a low repayment plan that the court will impose.

By choosing the right debt relief program, you get to maximize your resources to get faster debt freedom.

The second truth that you may want to remember is knowing what you are up against. Education is your best defense against debt. This is true for both debt and personal finance management. You have to research the laws that are protecting you as a consumer. Among the laws that you need to know include the Telemarketing Sales Rule (TSR - for those opting to hire debt professionals) and Fair Debt Collection Practices Act (FDCPA - to protect against abusive collectors. Knowing your rights and what the government mandated debt relief companies to implement will protect you from being scammed out of your limited money.

The last truth that you have to know and apply in your life are the habits that will keep you from debt in the future. It is one thing to pay off your debts. It is a different ballgame that involves developing the right habits. It all boils down to proper financial management - something that you have to do while you are undergoing debt relief. You need to learn how to save, budget your money and make smarter spending choices. All of these will help you live within your means and thus minimize the chances of your landing in debt once more.

Know all these so you can enjoy a successful debt relief program and thus achieve a lasting debt freedom.

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