When you find yourself in extreme debt, it can feel as if you are trapped in a prison. In this situation, it is important to figure out a way to get the debt under control so that you can improve your credit scores and free up more of your money every month. There are a number of debt solutions to consider in this scenario.
Lower Expenses
When you need to pay off a large amount of debt in a short amount of time, you may want to consider drastically cutting your expenses. For example, you may be paying more than you should for housing or for an expensive car. If you want to save more money so that you can pay down your debt, you might need to move or sell the car. Look for ways that you can cut back on your monthly expenses so that you can devote more money to paying down your debt.
Debt Settlement
If you have a large amount of debt, you may also want to consider using debt settlement. Debt settlement is a process in which you agree to pay less than what you owe to your creditors and they agree to close out your accounts. In some cases, you can settle your debt for less than half of what you owe. While this can help you eliminate the debt very quickly, it can also hurt your credit score.
Debt Management
Signing up for a debt management plan can also give you an advantage when it comes to trying to pay off a large amount of debt. A debt management plan is a plan that is administered by a credit counseling agency. The agency negotiates with your creditors to get much lower interest rates on your credit accounts. Then you make a single payment to your debt management plan every month and your creditors are paid out of it.
Bankruptcy
When you have an extreme amount of debt, bankruptcy might be the best option for you to consider. Filing bankruptcy can allow you to completely eliminate most of your debts and start over with a clean slate. You can use Chapter 7 bankruptcy for this or you could file Chapter 13 and set up a repayment plan with your creditors. Your income and the amount of debt that you have will play a role in what you qualify for.
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