6 Options for People Struggling with Debt

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Many people with a lot of debt can often wonder how they will find the light at the end of the tunnel as far as becoming debt-free

 

With debt levels escalating due to the Covid pandemic, more and more people are finding they need assistance when it comes to debt and making sure they avoid falling further behind on payments and risking their credit score in the process.

Debt consolidation is a legitimate form of repaying what you owe and can be achieved in different ways.

1. Debt Repayment Plan

Seeking legal assistance from companies such as Canyon Legal Group can help you to consolidate your debts and deal with creditors to who you owe money and work out a more affordable option that considers your circumstances and allows you to meet your obligations in a way your creditors are on board with.

2. Debt Consolidation Loan

If you have a good credit score and haven’t defaulted on any payments, then it can be worth looking into affordable loan options to pay off what you owe and only pay back one loan repayment each month. 

While this option is great for helping you budget and makes more affordable payments, it could be that while you are saving interest and other credit lines such as credit cards, you could pay more in the long run by the time you have paid your loan back.

3. Secured Loan

A secured loan can be taken out against your home or a car if it is finance-free. They are lending to those who have good credit and are able to make repayments on time.

Secured loans, if defaulted, can put your car or your home at risk as any money owed is taken from the sale of the item the loan is secured against. In this respect, it is always worth considering this option carefully.

4. Credit Cards

Moving your credit card balance or consolidating your debt to one credit card can be an option if you have low levels of debt or qualify for lower interest rates or balance transfers. This can give you some breathing space from paying interest and make it easier to repay.

5. Call Creditors

Other options to avoid increasing your debt levels are to individually contact each of your creditors, explain your situation, and your willingness to repay what you owe but at a more affordable level. While many lenders will work with you to allow for a better repayment plan depending on your circumstances, not all lenders see this approach in a good light and can refuse, especially if you have already missed payments and have fallen behind.

6. Bankruptcy

Personal bankruptcy is also an option, but it has long-term and far-reaching implications. People who obey the bankruptcy laws get a discharge, a court order stating that they are not responsible for any debts. However, bankruptcy details (both the filing date and the later date of discharge) remain on a ten-year credit report. They can make it difficult to obtain credit, purchase a house, obtain life insurance, or even find work. Still, bankruptcy is a legal process that allows people who have run into financial difficulties and cannot pay their debts to get a new start.

 

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