Help for Debt Solutions

While it is easy to get into debt, it is usually a major chore to get out. Debt could end up costing you thousands in interest and even more in terms of peace of mind if you don't get the reigns of your financial situation. If you need help with your debt, consider the various solutions at your disposal.

Types of Debt

Before seeking debt solutions, know the different types of debts. You can classify debt in two ways: unsecured or secured and revolving or installment accounts. An unsecured debt is not associated with a valuable piece of property, while a secured debt is associated with an asset of value. A revolving account persists indefinitely and the account holder can continue to use the funds, while an installment account ends at a pre-determined point in time. Debt accounts come with a fixed or variable rate. In many cases, it is a priority to get rid of unsecured, revolving, variable-rate debts (like credit cards) because they are the most expensive to maintain.

Budgeting

One way to solve a problem with debt is to establish and follow a strict budget plan. Once you have your budget established, you can then start putting all extra funds toward paying off the debt each month. You can either put the extra money toward the highest interest rate debt first and work your way down or you can pay off the debt with the lowest balance first then move your way up. A financial adviser can help you create a budget and payoff plan.

Debt Management Plans

Another debt solution is a debt management program (DMP). This is a last resort option to pay off debt that you have a hard time managing. With a debt management plan you must send a flat payment to a plan provider monthly. The provider pays off the debts on your behalf after negotiating with creditors. The provider cannot make guarantees on how a DMP will affect your credit report, and if you miss a payment that could throw the whole payoff program off course.

Credit Counseling Services

If you decide to get on a debt management program to solve issues with excessive debt, you should call a credit counseling service for guidance. Even if you don't want to participate in a DMP, you should still consult with a certified credit counselor to see what options you have to pay off your debt. Check out the credit counseling service with the Better Business Bureau before proceeding.