What options do I have if I feel like I need help with my debts?
If you feel like you need help with your debts, then you probably need help with your debts. Anytime that you have that “feeling,� that is more or less like an admission that something is wrong and it needs to be fixed.
You can always work on your debts on your own, but sometimes that will not suffice for the fact that the income is just not there. Sometimes, individuals face situations in which the debt far exceeds the money they make and there is really no way they can budget their cash to make it work. That is usually when they visit with a debt management company to help them negotiate smaller amounts with their creditors if they need to.
If a person needing debt assistance does not have bad credit, then they can take out a debt consolidation loan, which involves borrowing just enough money to pay off their debts. This consolidates all debt payments into one payment.
Another option that an individual with good credit has is to refinance their mortgage if they have enough equity that they could borrow from it and use it to pay off their debts. Many individuals decide to go this route if they can because it combines their mortgage payment in with the money they used to pay off their debts.
For those with bad credit, there is an informal arrangement. This is an arrangement made with a creditor that is not legally binding. This means that the creditor can pull out of the agreement at any time. The agreement may include freezing interest rates and reduced payments. It is even possible to reduce the amount owed. However, a majority of creditors must agree to allow this type of arrangement for it to take effect. The alternative to this is the debt agreement, which is legally binding. There is a maximum after tax income amount of $61,875 annually and debt cannot exceed $82,500. Assets should not exceed $82,500 either. You also cannot have a bankruptcy on your credit report for the past 10 years.
Types of debt agreements include Part X Agreements and Part IX Agreements. These stay on your credit report for a period of 7 years. A Part X agreement is for those who are in debt further than those who can file a Part IX agreement. The Part IX agreement is cheaper than the Part X and the debt and income requirements are lower. These agreements involve submitting a proposal to creditors and conducting a meeting in which the creditors must look at the proposal and agree upon the arrangement.
The last resort is bankruptcy, which is what many debt management companies try to help you avoid because you lose financial and personal freedom with a bankruptcy. You can lose travel privileges, have job issues, and so much more. This is in addition to having a bankruptcy on your credit report for 7 years. So make sure you make this a last resort.
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