If you’re like so many Americans and have debt, you may feel like you’ll never dig your way out. But relief could be closer than you think. There are many little-known solutions that are available to help consumers get back on track financially and reduce the stressful burden that comes from debt. Learning more about debt relief programs and debt consolidation loans can help you find the answer to your worries once and for all.
What Is Debt Relief?
Debt relief is simply using established methods to manage financial debt in a long-term manner that alleviates the stress that comes from owing more money than you are able to pay. There are many different kinds of debt relief programs that are available for consumers who have maxed out their credit cards and spent more than they could afford. However, not every method works for everybody.
In general, there are a few main options for debt relief. A balance transfer allows you to move your high balance from one credit card to another card with a lower interest rate. Some cards have zero percent interest rates for a specific time period with qualifying credit. Bankruptcy, also known as “chapter 7,” discharges many major debts, but this option stays on your credit for up to 10 years.
Another option is debt negotiation, which settles debts but can also impact your credit for many years and may require a large cash payout up front. Some consumers choose debt consolidation plans, where they work with counselors to pay off debts at a lower rate over many years until the debts are paid. The final option is known as a debt consolidation loan.
Pros and Cons of Debt Consolidation Loans
Debt consolidation loans are a little-known option that can make a major difference in your financial life. There are a few different kinds of debt consolidation loans, and it’s best to talk with a professional to determine which type is best for you.
Some people do well with a cash-out refinance loan, which allows your home equity to serve as the answer to your credit card debt problem by providing you with cash. You can lock in a good cash-out refinance loan, even if you don’t have the best credit. Another way to use your home to alleviate your debt is with a home equity loan. This is ideal if you purchased your home before property values increased in your area.
Finally, a personal loan may be a debt relief option for you. With fixed rates and fixed payments, you can pay off ballooning debt like medical bills or student loans by making one consolidated payment over a scheduled period of time. This can even help improve your credit.
Action Steps to Creating Your Plan
To decide the next step in ridding yourself of the stress that comes from debt, you need to first identify your goals. If you wish to simply find debt relief, you first need to take an inventory of your financial health.
Write down all your debts, the minimum payment for each month for each debt and the total amount you would need to find complete relief. Don’t forget to include all your monthly bills — your cell phone, your food bill, your housing costs, etc. Understand exactly what is needed each month for you to live your life as you currently do.
Next, identify all your income streams. With this information, you can see exactly how much you are lacking. You can use this information to reach out to a professional to determine if one of the debt relief programs or loans are right for you. It is important to not give up hope, but instead feel empowered that there are ways to work through debt so you can achieve financial success that will last a lifetime.
To learn more and connect with a finance expert, log on to www.refi.com.