How
Can You Help Yourself? (Part IV of IV)
Debt consolidation is another good way of managing your debt. You simply
take all of your smaller bills and roll them into one larger loan. This
allows you to get a lower interest rate than you had before, lower monthly
payments and the convenience of only having one bill to worry about.
However, debt consolidation is usually a secured loan. So if you have a
bunch of credit cards and you get a debt consolidation, chances are you are
going to have to secure it with something – usually your home. This means
that if you cannot pay the debt consolidation they can take your home, so
think carefully about this step as it could prove to be very dangerous. If
you think there is any reason you might not be able to pay back the debt
consolidation then do not do it!
Then of course, there is personal bankruptcy. This is considered to be a
last resort as no one wants a bankruptcy on their record. This should be
considered only after you have tried credit counseling, debt consolidation,
debt management, etc. and still cannot get relief. The mark will stay on
your credit for ten years, and can make it tough to get a lot of other
things later on, such as a loan or mortgage of any kind, life insurance,
some jobs, etc.
There are two kinds of bankruptcy – Chapter 13 and Chapter 7. Chapter 13
lets you pay things off and keep things like your house and car. Chapter 7
liquidates everything you have to pay off your creditors and then all your
debts are gone. Both kinds stop the harassing phone calls and anything that
goes with having an outstanding debt. One of the benefits of filing
bankruptcy is that you have to take a credit counseling course which will
teach you about your money.
There are also debt negotiation programs which are not offered in every
state. Some of these are not considered really reputable because of the
claims that they make – but some actually work. Some of them can get your
debt reduced so that you end up paying less on the debt. Some of these
places charge a fee for this as well, so be careful what you are getting for
your money. Sometimes you can talk to the companies directly and settle your
debt by yourself, this will assist you in getting debt free faster.
Whatever you do, just be smart about it. There are many companies out there
who say they want to do well, but they really don’t so you have to be
careful who you deal with to get debt free.
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