3 Options for Debt Relief

3 Options for Debt Relief

So you’re seeking options on how to get out of debt! Perhaps, you’ve piled a significant amount of credit card or high interest debt. Maybe, you’re struggling to clear your small business loan. No matter the situation, it’s possible to get rid of debt. However, you should research and know the options to become debt-free. Here are 3 popular options for debt relief.

Debt Consolidation

If you’re unable to clear your debt due to low monthly income, debt consolidation is the best option. Without getting a hit on your credit, you can nix all of your debts easily. In debt consolidation, all of your debts are combined into a single payment. Also, the rate of interest is pretty low on the new loan. Instead of managing multiple debts, you will have to pay one monthly installment to one creditor.

Debt Settlement

If you’ve sizeable debt to your name, debt settlement might be the right option. In debt settlement, you don’t pay off your entire debt. Instead, a negotiation is made with your creditors to reduce the debt. You can carry out the negotiation process on your own or hire a settlement attorney. Hiring a settlement attorney is a better bet. A reputed attorney will negotiate with your creditors and could reduce the debt amount by 60 to 80 percent. Note that your credit will be hit for a short time until you clear the debt.

Bankruptcy

In case you’re left with no income and assets, filing for bankruptcy could be the only debt relief option. Chapter 7 of the bankruptcy law eliminates your debt completely. However, you should have little to no disposable income in order to be eligible for chapter 7 bankruptcy. If you’ve some assets and income that can clear a small portion of your debt, chapter 13 bankruptcy would help out.

Chapter 13 of the bankruptcy law lets you reorganize your debt so that you pay off a small debt amount and become debt free. This option also lets you strip a lien from your real estate if the market price is less than the owed amount. While bankruptcy provides quick relief from debt, your credit will be hit. Aside from losing credit cards, it’ll be difficult for you to avail a loan or mortgage for the next 7 to 10 years.

Bottom line

Debt is a big burden that could feel paralyzing. Even though you may feel trapped with loans, there are debt relief options. By using an ideal option, you can do away with debt and bring your finances back to normalcy.