What Options Do You Have When You’re Buried In Debt?

Choices

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Editors Note:  Today’s post is a guest post from Bob Miller, one of my friends over at CareOne Services, Inc.  Hope you enjoy his expert advice and perspective on debt!

Do you find yourself buried in debt? Does it feel like all of your income is going toward paying off credit cards? Does it seem like there’s no way you can dig yourself out of this financial pit of despair? Are you tired of the constant collection calls? Do you just want it all to STOP?

You’re not alone. Millions of people struggle to manage their debt. In fact, a new study found that only 55 percent of Americans have more in emergency savings than they have in credit card debt. Furthermore, the average U.S. household has more than $15,000 in credit card debt. In total, American consumers owe $856.8 billion in credit card debt. That’s billion with a b.

Those are some pretty depressing numbers to look at, and as you undoubtedly know, being in major debt is certainly depressing. But today is a day for good news. Today is the day that you can start to turn things around and get on the path to a better financial future, because today, you’re going to learn about some of your options for getting yourself out of debt.

  • Creating a realistic budget—Your first option is to go the self-help route by creating a realistic overview of your financial situation. By outlining exactly how much money you make, your fixed expenses, and your variable expenses, you can get a clear assessment of your spending patterns. This budget will allow you to identify unnecessary expenses, find areas where you can save money, and most importantly, make certain that you actually have enough money to make ends meet. Being in tune with your finances like this is certainly a smart thing to do regardless of which other debt relief options you pursue.
  • Transferring existing balances to lower APR cards—Another self-help debt relief option is to transfer your existing balances to credit lines with lower interest rates. This can be a particularly attractive option on cards that offer 0 percent APR or low-rate transfers for some period of time. This method allows you to rearrange your debt so that you owe it to someone else at a lower monthly rate. Of course, there are some things you need to watch out for when transferring balances, such as hidden transfer fees and different APR on balance transfers than new purchases.
  • Considering enrollment in a debt management plan–Enrolling in a debt management plan with a debt relief firm is another option for those buried in debt. With a debt management plan, all of your unsecured debt is consolidated into a single monthly payment to your debt relief agency, who then disburses the payments to your creditors. Some of the advantages of a debt management plan are that it could result in lower interest rates and stopped late payment fees. Not to mention, many consumers find paying just one monthly payment to be much simpler.
  • Looking into debt settlement—Debt settlement is another form of debt relief you may wish to consider. With a debt settlement plan, your debt relief agency will work with your creditors to try to negotiate a lowered settlement amount than what you actually owe. While this option appears attractive because it reduces your payments, it’s important to note that debt settlement could result in increased collection activity and cause a hit to your credit score.
  • Considering filing for bankruptcy—When you hear the word “bankruptcy,” you probably immediately bristle at the thought of it. It’s understandable. Filing for bankruptcy is a major action that will have a huge impact on your life and you should consult with an attorney to understand whether or not it is the correct path for you. However, in some cases, it’s the only feasible option one might have left. The truth is that bankruptcy isn’t always a bad word, and there is hope after bankruptcy. The key is to make the most of that fresh start by learning new financial habits and taking the necessary steps to reclaim your financial independence.

Working with a debt relief firm

You may have noticed that some of these options involved working with a debt relief firm. A word of advice: not all debt relief firms are the same. Remember, we’re talking about your finances and your well-being here. That’s why it’s so important to make certain you choose your debt relief agency as carefully as possible.

Here are some key things to look for in a debt relief firm:

  • Check to verify they have a good BBB rating.
  • Make sure they employ certified professionals to give you financial advice.
  • Pay attention to their fees to ensure they are fair and competitive.
  • Interview a few debt relief firms to find one you feel comfortable working with.

Remember, no matter how bad things look now, there is hope, but you have to start taking the steps right now to make things better. Here’s to your success!

About Bob Miller

6 Responses to “What Options Do You Have When You’re Buried In Debt?”

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  1. I’d suggest that you check with your bank or credit union if you need help too, many offer free credit consoling or debt management help from reputable agencies.

    • Travis says:

      I remember when we were looking for help with our finances…we made an appointment with someone at our bank, and they were useless. We told them we needed help NOW, and their suggestion was to pay down our second mortgage faster so we could borrow against it and consolidate our debt. Did I mention they were useless? Maybe things are different now – I hope so – it seems like banks should be able to help out their customers who are struggling a bit more than the advice we got. Thanks for your comment!

  2. All this makes me relieved I’m no longer in debt. Just reading that made me feel stressed! 🙂 I was talking to a friend of mine about how sometimes people who are in so much debt, are just in serious denial and just keep spending. We have a mutual friend who is like this and it makes me wonder what number they will reach before they wake up and think, “holy crap what have I done?!”

    • Travis says:

      Exactly, Tonya….you make like an Ostrich, put your head in the sand (did you know they don’t actually do that, though?? – sorry off topic) and hope it gets better. But it doesn’t.

  3. I LOVE your point that today is the day you can turn things around. I remember getting those calls and letters threatening all sorts of things and boy am I glad to be debt free. There are options out there and it is possible to climb out from under the debt. It’s not easy by any means, but certainly doable.

    • Travis says:

      There’s as saying I’ve seen go around on Facebook for fitness goals – but it applies to any goal really, “6 months from now you’ll wish you started today.” It’s not easy…but it’s worth it!!

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