By J. Star
Are you carrying over $10,000 in credit card, medical, student loan, business and/or other unsecured debt? Does it seem like bankruptcy is the only option? Many people do not realize the options they have to avoid bankruptcy. After researching all your options and consulting with your financial and legal advisors you may determine that bankruptcy is the best option for you. But it is important to research your alternatives first.
Here is a quick breakdown of what they are:
- The Debt Snowball. This option is only available to those who still can afford to pay there current debt but want to get debt free faster. It is a simple account method where you stack your debts according to lowest to highest balance or highest to lowest interest rate. You then put all extra money above the minimum payments towards the debt at the top of the last. As you pay off debts you put the money that you were spending on the previous debt(s) toward the debt next in line. Using this method you will pay off your debts much faster and will save thousands in interest.
- Debt Consolidation. In debt consolidation, you take out a larger loan to payoff a group of smaller loans. In order for this to be effective the loan used to payoff your other debt must have a lower interest rate than the average of all interest rates across your other debt. With a lower interest rate your payment will go down and thus giving you some financial breathing room.
- Debt Management Plan. In a debt management plan you negotiate the terms of your existing debt in order to lower your interest rate and/or extend your payment period.
- Debt Settlement. Settling your debt involves negotiating a flat payoff of your debt at an amount significantly less than your actual payoff. In order to be able to negotiate such a settlement you must be late on your payments to the creditor.
This is a brief overview of the options for avoiding bankruptcy. No two people are the same and no solution is right for everyone. Study the options, understand the pros and cons and then, together with your advisors, choose the path that is right for you.
Lime Financial's primary objective is to help lighten the weight of debt and credit disarray from the lives of our clients.. Learn more about our Debt Settlement Services.
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