Get Out of the Red Now: 10 Essential Elements of a Debt Relief Plan

Get Out of the Red Now: 10 Essential Elements of a Debt Relief Plan

You’ve always had such discipline when it comes to money management but now you find yourself in a financial bind. You, therefore, need a quick plan to help get out of the red but have no idea where to start.

Don’t worry; we have put together some great debt relief plans that you can use.

Get out of the Red with Our Debt Relief Plans

You can find yourself in debt due to various reasons. It could be that you’re paying for a home or student loans. Medical emergencies, unemployment, poor credit card usage, among others, could result in an individual drowning in debt.

There are, however, certain steps one can take and well explore them below.

1. Consult Financial Experts

You can reduce or even eliminate credit card debt with some discipline on your part. If you find that you’re not able to do this, talk to financial experts to help you negotiate lower rates, create  talk to financial experts like Debt Busters in Australia budgets or even refinance a home. In some situations, lenders can reduce the amount you need to pay if you make lump sum payments.

2. Debt Management

The goal of debt management is to help you live a debt free life by reducing fees and interest rates. It also helps you negotiate for lower monthly payments on your credit cards or any other unsecured line of credit. You’re able to organize the payments so that you manage them efficiently.

When you’re able to make timely payments, your credit score will improve. Be patient though, this is a slow process, and it could take up to five years to eliminate the debt.

3. Debt Consolidation

With debt consolidation, you take one loan to pay off all your unsecured debts. You therefore only have to deal with one loan which will make it easier for you to manage your monthly payments. You can also negotiate for lower interest rates, which will result in less financial burdens for you.

Please note, not everyone can qualify for debt consolidation, and be careful about the fine print because of hidden fees. Securing the loan also means that you could lose your property if you’re not able to settle the debt.

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4. Debt Settlement

A lender may give you the option of settling a debt with a lump sum payment. The lender will accept a lower amount as long as you make a one-off payment. This option is great for people with poor credit, but it will not help your credit score.

The lender will have to report that you settled the debt for less than previously agreed, meaning it’ll still impact on your credit rating.

5. Bankruptcy

Sometimes despite our best efforts, we aren’t able to settle our debts. Bankruptcy is the last option for many people. You have the option of Chapter 7 which will cancel your debt or, chapter 13 which gives you a three-to-five-year repayment plan. Debtors won’t be able to follow you for any collections, so you avoid harassment.

The major disadvantage is that you’ll ruin your credit score because it stays on your record for seven to 10 years. Engage the services of law firms like McCarthy Debt Law Firm who will give you good advice, and argue your case for you if you need to go to court.

6. Track Your Spending

Sometimes you need to take a step back, and see where the money is going. It is very easy to overspend when doing grocery and personal items shopping. Draw up a budget and stick to it. Also, consider how you make your payments.

You may be wondering which payment type is best if you are trying to stick to a budget. Forget about credit cards; use a debit card or cash payments. Debit cards or cash payments only allow you to spend what you have; credit cards will get you deeper into debt.

7. Pay It, Plan It

Some credit card issuers are offering the Pay it Plan it feature, which will help you manage your purchases. You split up the final cost into monthly payments. The fee is fixed, and you pay no interest.

This method of payment may not be suitable for everyone; you still need to have financial discipline, because the monthly fixed payments can be a lure to purchase things you do not need. Good credit history is mandatory because it shows that you’re able to make the monthly payments.

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8. Get a Side Job

This is one of the best ways of how to pay off debt fast with low income. If your main source of income is not giving you enough, get a second or third job. The online marketplace is vast, and you’ll find many money making opportunities there.

You can also sell what you do not need on sites such as craigslist or eBay, but do note, this is not sustainable because you will run out of stuff quickly.

9. Debt Snowball Plan

The Debt-snowball method requires that you pay our debts by starting with the smallest amounts, then moving onto the largest. It’ll help change your behavior because you become intentional about paying all your bills until you are debt-free. Even as you make payments on the larger amounts, most of the money will go to the smaller debts, thus eliminating them faster.

10. Balance Transfer

Credit card companies can allow you to transfer debt from one credit card to another within a fixed period at 0% interest. You’ll save up on what you would pay in terms of interest from the old debt. You have to be careful about the balance transfer fee.

You also don’t necessarily get rid of the debt because you’re just transferring it onto another credit card.

Also, note that your credit has to be good before you get approval for a new card. If you do not have very good financial discipline, you may end up getting into more debt with the new card. Weigh this option carefully before you choose it.

Are You Ready to Be Free of Debt?

We have shared with you ten methods you can use to get out of the red. Whichever option you go for, you need to have financial discipline so that you can get rid of any debts that may be holding you back.

Don’t hesitate to get in touch with us if you need additional information.

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