Misery Loves Company
If you are finding it difficult to pay your bills these day, know that you are not alone. If you are worried about your home being foreclosed or your automobile being repossessed, millions of your fellow Americans are in the same boat. Most people face financial troubles at some point in their lives. The reason can range from losing your job, a serious illness in the family or simply reckless spending.
Although owing a lot of money can seem overwhelming, there are steps you can take for debt relief. If you take proper action right now, your financial picture does not have to go from bad to worse. If you find yourself in turbulent financial waters, please take a few minutes to fill out the form on the bottom of this page. Our debt relief professionals will contact you with ways to extricate yourself from the web of continuous debt.
Options for Debt Relief
Some options to start you on the road to financial freedom include:
• Establishing a realistic budget
• Credit counseling
• Consolidating your debt
• Bankruptcy
Which of these options may work for you depends on your level of debt, your prospects for the future and how much discipline you have.
Budgets
The first thing you should do when preparing a budget is to realistically assess how much money is coming into your household each month and how much money you spend. You will need to set up a list of your fixed expenses, such as mortgage or rent payments, utilities, school loans, car payments and insurance premiums. You should then list such variable expenses as entertainment, clothing and medical bills. Writing down all income and expenses will help give you a clear picture of your spending patterns. The main idea of a budget is to insure that you have allotted the necessary funds to cover such basic needs as housing, food, insurance and medical expenses. If you are trying to pay off debt, this must also be included in your budget plan.
Credit Counseling
You may want to consider credit counseling if you do not have the discipline to stick to a budget and are unable to work out a payment plan with creditors. There are many credit counseling organizations that are legitimate and not-for-profit. These may be found at your local college, military base, credit union, housing authority, your financial institution or local consumer protection agency. A reputable credit counseling organization will advise you on a personalized plan to manage your finances and can offer realistic avenues to debt relief. Be aware that not all debt relief organizations are free, affordable or legitimate—do your homework before signing on the dotted line.
Debt Consolidation
You may actually be able to lower your credit costs by consolidating your debts through refinancing your home with a second mortgage or equity line of credit. However, you must be careful. Since you are securing your loan with your house, if you cannot make your payments on time, you risk losing your home to foreclosure.
Bankruptcy
Filing for bankruptcy should be your last resort since the outcome is both long-lasting and far-reaching. A bankruptcy filing remains in your credit report for ten years and can make it very difficult for you to purchase a home, obtain life insurance or even get a job. However, it is a legal option that offers a fresh start for people who absolutely cannot find another way out of their debt.
• Chapter 7 is known as straight bankruptcy and involves the sale of all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. You must wait eight years between filings under Chapter 7 bankruptcy codes.
• Chapter 13 allows you, if you have a steady source of income, to keep such property as a mortgaged house or car, which you might otherwise lose. Under Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five year period, rather than surrender any property. When you have made all the payments stipulated in the plan, you will receive a discharge of your debts.
Both Chapter 7 and Chapter 13 bankruptcy will get rid of unsecured debt and stop foreclosures. They can also stop repossessions, garnishments, utility shut-offs and debt collection activities. Both also provide exemptions that allow you to keep certain assets.
I enjoyed the Flickr photo album at the end of the article.