It’s pretty clear that America has a a massive amount of debt. Both the federal government and the constituents have debt problems, and for the citizens, a lot of it is in high interest credit cards. People are trying to find reasonable solutions. While paying it all off is likely not an option for most people, consolidating debt and debt settlement options are very realistic solutions that can help the problem in the short term, though there are some drawbacks such as a lower credit score that could last for years.
The good news is that there are debt relief solutions. They range from changing the way we live to taking real action that will resolve our problem faster but will leave a trail that could last awhile.
1. Cut Back Drastically
If we cut back a lot on expenses, we’ll have a lot of money to pay down our debt. In situations where there’s a massive amount of debt, this may not have enough of an effect, so we’ll have to keep going down the list.
2. Consolidation
Debt consolidation can include things like taking out a home equity line of credit and paying off all high interest credit card debt. You may be able to lower your interest rate, but at the same time, you could be putting your home in jeopardy if you can’t consistently pay the bills going forward.
3. Counseling
People can enroll in a debt management plan that will help reduce interest rates, stop exorbitant fees and the constant phone calls asking for payment, and help get them back on track. Not a bad solution for people who really need help.
4. Settlement
A company may be willing to accept 50% of the payment, but by settling, there could be major effects on your credit score. Does the long-term cost outweigh the benefit of getting rid of the debt now?
5. Bankruptcy
The consequences to credit scores are severe and can last up to 7 years. This would be a move of last resort, but in dire cases, it may be the best course of action.
