Credit Counseling. Credit counseling companies are vying for your business. This can be a good option as you shop around to find the best plan out there, but bad as you learn that many companies will charge exorbitant fees or do work for you that you can do yourself. Some government agencies and nonprofit firms provide credit counseling too. For little or no money you may be able to find a professional who can help you navigate through your debt dilemma.
Debt Consolidation Loan. Replace your high interest credit cards with one, low interest rate credit card. You could also see if a lending institution will give you a debt consolidation loan. However, you may have to pay for an application fee, whereas with a credit card you would not.
Home Refinancing. Even with rising interest rates, refinancing your mortgage may make sense and allow for you to save hundreds of dollars per month on mortgage payments. With the monies saved with a new, lower mortgage payment you could use your savings to pay off your other debt.
Cash Out. Alternately to home refinancing, you may have enough equity in your home to cash out and pay off your debt. Importantly, although credit card debt is not tax deductible, a home equity loan is. Ultimately, you can reduce your debt as well as reduce your tax obligation by cashing out. You have some viable solutions to help you reduce your debt. Learn all you can about each option and select the plan that is right for you.
Great tips! However, debt consolidation, credit counselling and bankruptcy will result in complete credit destruction for 7-8 years.
ReplyDeleteI would like to add a tip...having recent experience and checking into all of these options. Not one of these options would pan out for my clients.
When all of these options won't pan out for one reason or another, the only thing left to do is to sit down and work out your own debt management repayment plan on your own to pay back your debt. You can actually go through the process on your own by negotiating with your creditors on your own. I have done this for my clients and they still have their assets and access to credit. With this process, you can rebuild your credit a lot faster than some of these other options.
If you would like some further information on putting a plan together on your own, please feel free to email me at ccoffinlaugalys@gmail.com
Of course, every one of these options require an income.
Sitting down and figuring out a repayment plan on your own, when nothing else will work out for you, may be the best thing that happens for you during these stressful times.
Keep the faith! Everything always works out for the best!