Ten Ways to Get Out of Debt

1) Use your Assets

If you have assets with some significant equity, such as a home or a car you may be able to use these to get control of your debt. For example, you could get a loan on your home sufficient to pay off your debts. You could be saving a considerable amount of money on interest if you pay off high interest credit card debt in return for lower cost debt.

If you have a car, consider selling it, paying off your debts and buying a cheaper car. Be careful though! Your don't want a "cheaper" car that will cost you a fortune in repair costs.

2) Get a Second Job

Use the money from this job to only pay off your debts. List your debts noting the interest rates. Pay off the debts with the highest rates first and work your way down the list.

3) Put your Credit Cards on Hold

One of the best steps you can take to get out of debt is to immediately stop using credit cards. At the very least destroy all your cards keeping just one card for emergencies.

4) Set up a Repayment Plan

Cut back on your expenses and/or use freed up cash to pay down your debts. Pay off the debts with the highest rates first and work your way down the list.

5) Get a Consolidation Loan

A consolidation loan can make lots of sense. Get a loan to pay off all your many debts and have just one payment to make. The new loan usually has a smaller payment and a lower interest rate.

6) Use the Services of a Credit Counselor

There are two types of credit counselor, for profit and "nonprofit". We do not distinguish between the two as they provide similar services and both charge a fee. Credit counselors can assist you in acquiring the discipline you need to get control of your debt. Be careful! Many people do not fully understand all the ramifications involved such as:

Impact on your credit rating

The credit bureau will record that a plan is in place.

Are your payments too high?

Your payments should be high enough to significantly reduce your debt but not so high that you have "no life". If you do not have money left over at the end of the month to pay for the small pleasures in life you may find that you end up defaulting on your payments.

For how long should you pay?

Most experts feel that the term should be three to four years. It is a stipulation in the new Bankruptcy Reform Bills that the term be 3-5 years. Terms longer than this have a very high failure rate, because people cannot see a "light at the end of the tunnel".

7) Informal Proposal - Payments over time.

In some cases you can make a proposal to your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.

8) Informal Proposal - Lump sum payment.

You may be able to pay less than 100 cents on the dollar. For example, a relative may be willing to pay a lump sum to the creditor of say 50% of the amount owed in order for the balance of the debt to be written off. Your creditors will be more willing to accept this offer rather than have you file Chapter 7.

This works best when there are few creditors.

9) Chapter 13 Bankruptcy

You are probably a good candidate for Chapter 13 bankruptcy if you are in any of the following situations:

1. You have a sincere desire to repay your debts, but you need the protection of the bankruptcy court to do so. You may think filing Chapter 13 is simply the "Right Thing To Do" rather than file Chapter 7.

2. You are behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy.

3. You need help repaying your debts now, but need to leave open the option of filing for Chapter 7 bankruptcy in the future. This would be the case if for some reason you can't stop incurring new debt.

4. You are a family farmer who wants to pay off your debts, but you do not qualify for a Chapter 12 family farming bankruptcy because you have a large debt unrelated to farming.

5. You have valuable nonexempt property. When you file for Chapter 7 bankruptcy, you get to keep certain property, called exempt. If you have a lot of nonexempt property (which you'd have to give up if you file a Chapter 7 bankruptcy), Chapter 13 bankruptcy may be the better option.

6. You received a Chapter 7 discharge within the previous six years. You cannot file for Chapter 7 again until the six years are up.

7. You have a co-debtor on a personal debt. If you file for Chapter 7 bankruptcy, your creditor will go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments.

8. You have a tax debt. If a large part of your debt consists of federal taxes, what happens to your tax debts may determine which type of bankruptcy is best for you.

10) Chapter 7 Bankruptcy

If these alternatives will not work for you, bankruptcy may be the only way for you to get a fresh start. Chapter 7 Bankruptcy offers a quick solution to getting out of debt.

For more information, visit www.mybankruptcycounseling.com

Nathan Dawson writes for http://www.mybankruptcycounseling.com

---

Senate Passes New Bankruptcy Law

The United States Senate passed a law on March 10,... Read More

How Do You Spell Debt Relief?

Of all the problems possible in a marriage, finances cause... Read More

Debt Elimination

If you're reading this article right now I'm sure that... Read More

Bankruptcy Reform

There are some new bankruptcy laws going into effect before... Read More

British Families and Debt

There is current concern from the Bank of England that... Read More

Budget the Luxuries First!

Strictly speaking, his advice was preceded by another Heinlein maxim... Read More

Eliminating Credit Card Debt

The overwhelming task of eliminating your debts can often seem... Read More

What Are The Benefits and Consequences Of Getting Rid Of Debt The Easy Way

We have all experienced getting so far in debt we... Read More

Debt Collectors; And what you can do to Get Them Out of your Life

FTC opinion letter on validation Section 809(a) of the FDCPA,... Read More

Is Independence Overrated?

Happy Independence Day from The Money Motivator!If you don't celebrate... Read More

Going Bankrupt in the World

It all starts by defaulting on an obligation: Money owed... Read More

Credit Counseling or Bankruptcy: Which is Best for You?

People often get to a place where they simply can't... Read More

Debt Management - Is It the Right Choice For You?

Debt Management plans offer credit counseling clients a different and... Read More

The Road to Debt Relief

Living with debt is not something someone hopes for, but... Read More

Bankruptcy - The Easy Option?

Incredibly, since the changes in the bankruptcy law in April... Read More

Learn How to Get out of Debt

Debt is becoming number one problem in the United States... Read More

Debt and Financial Optimism in the UK Continue

With £1.3 trillion pounds worth of debt in the UK,... Read More

How To Avoid Medical Collections

With medical collections costing doctors millions upon millions of dollars... Read More

Debt: Dont Pay Your Minimum Balance

Almost all Americans carry credit card debt. Actually, over 40%... Read More

Taking The Plunge Into Bankruptcy

Bankruptcy is one of the most difficult things a person... Read More

5 Methods Toward Reducing Your Debt

Decreasing your debt is paramount to having a good credit... Read More

Establish Money Saving Goals For Added Success

Having something tangible to strive towards can work wonders for... Read More

How to Get Triple A Credit in 25 Days

Good credit is everyone's dream. A wise use of credit... Read More

Mr. Cheapies Frugal Budget Tips

So you feel like a hamster spinning your wheel? The... Read More

Should You Invest In Savings Or Payoff Your Debts?

I have faced this financial question 8 years ago and... Read More

Bankruptcy Reform: Designed to Protect Big Business

Who will benefit from the new bankruptcy reform laws? The... Read More

Debt Relief -- Why Most Programs Have A 75% Failure Rate

Debt consolidation, equity loans, credit counseling, debt management plans, even... Read More

Why You Should Get Out of Debt Today?

The main reason for getting out of debt today, is... Read More

Bankruptcy: Which Chapter Do I File?

There is more than one kind of bankruptcy. You should... Read More

Utah, the Nation?s Bankruptcy Capital

Congress recently passed the Bankruptcy Abuse Prevention and Consumer Protection... Read More

Credit Counseling ? Signs That You May Need Help

Credit counseling is a viable option for those who are... Read More

Christian Debt Consolidation ? Feel Comfortable About Managing Your Debt

Many Christians feel uncomfortable with the notion of being in... Read More

Get Debt Free

If you once have been caught in the debt trap,... Read More