If you are burdened by debt, there are steps you can initiate that will assist you paying off your debts without the blemish of filing for bankruptcy. Use these 4 methods to control the debt and start your journey of financial recovery.
1. Contact your credit card companies: Request each credit card company to help you. They may not waive the loan but can lower your interest rate. If the current interest rate is 12% or more, find out if they would be ready to reduce their rate by half. They may accept it as they want to prevent the default of your loan and are interested in recovering their principle. They would prefer to earn their hefty interest but if they realize that you are about to default on the loan, they will be happy lower the interest rate.
2. Opt for a debt consolidation loan: Combine all your debts into a single account, ideally the one having a fixed, low interest rate. With the proceeds of the loan, clear off your other debts and then repay your debt consolidation loan each month.
3. Home refinancing: Refinancing your loan can lead to debt reduction and save your money every month due to decreased mortgage payments that will help you to repay the other debt. But always remember, your home is in danger if you select this option.
4. Talk to a credit counselor: Many credit counseling companies provide debt reduction plans to help consumers handle their debt. This method works by talking to a counselor who will provide you with a plan to clear off your debts. The counselor will reach an agreement on your behalf with your creditors to reduce the rate that will consequently lower your monthly payments while allowing your credit rating to remain untouched. Both private companies as well as for government agencies or nonprofit firms offer credit counseling services. But note that most of the steps undertaken by a counselor can also be taken by you. Read the fine print to find out if any fees are required and your credit rating is affected in any way.
If you have been caught in the debt trap, do not lose hope. The new modifications in U.S. bankruptcy laws have made filing for personal bankruptcy a less desirable choice for the debtors. But if it the only way out for you, contact an attorney dealing in personal bankruptcy to evaluate your options. Do not let anybody pressurize you to make a choice that will give you grief in the future