Did you know that in 2018, the American household debt reached a staggering $13.8 trillion? It is no wonder that now more than ever, individuals and families alike are desperately seeking programs and solutions for debt reduction for the debt they have accumulated.
If you have accumulated loan debt, credit card debt, or debt of any kind, you have likely experienced the dread of incoming bills, late notices, and phone calls from creditors and debtors. When you do know how to properly manage your finances or if you are unaware of all of the debt reduction resources you have available to you, seeking and receiving the help you require becomes next to impossible.
Taking the time to familiarize yourself with various debt forgiveness and relief strategies while also learning about various debt forgiveness programs that you may qualify for is the first step to truly regaining complete and total control of your financial outlook and future.
Strategies for Debt Reduction
Whether you have struggled to properly manage your finances your entire life, or if you have recently encountered financial hardship, it is important to know strategies for debt reduction and debt forgiveness that can come in handy when you need them most. Some strategies for debt reduction include:
- Stop Adding to Your Debt – As soon as you determine and admit to having an issue with mounting debt, it is imperative to cease all use of credit cards and loans you currently have in your name. Stop adding to your mounting debt by cutting up credit cards and limiting your access to additional funds that you still need to pay on, especially if you are currently not in the best financial shape. Stopping the process of adding to your own debt is the first and most important step you must take to seriously take charge and control of your debt.
- Review Your Financial Situation – Getting an overview of your current financial picture and situation is extremely helpful when you are in the process of remedying and overcoming the debt you are in. If you are unsure of how to get an overview of your financial situation and your income vs. expenses on your own, consider working with a professional. Working together with a professional debt analyst is one of the quickest and most reliable ways to discover what changes you can implement into your daily life to help maintain control over your finances at all times.
- Track Your Finances – Keeping track of your income as well as your outgoing expenses at all times can ensure that you remain on track with reaching short and long-term financial goals. If you are unfamiliar with the process of budgeting or managing your finances, consider using a downloadable app for iOS and Android smartphones.
- Pay Off Debts in Less Time – One way to swiftly take control of your debt is to pay off any loans and debt you have to your name in less time. Paying off money and debts you owe can be done by increasing the monthly payment that is due on the money you owe each month.
- Ask About a Lower Interest Rate – It is sometimes possible to ask a creditor you are working with to lower your current interest rate, although it isn’t always guaranteed. Your interest rate may be lowered if you are a loyal and long-time customer or if you already have established a great credit score to your name and have never experienced issues with paying off debt in the past. The method of simply asking for a lower interest rate outright is often considered risky as it is at the discretion of the representative you are speaking with whenever you choose to contact your creditors.
- Create an Emergency Savings Fund – Another way to help reduce the amount of debt you have racked up is to create an emergency savings fund. It may seem counterintuitive to create an emergency savings fund if you are currently working towards paying off your debts, but it is a way for you to ensure that you have additional funds if you are ever hit with an unexpected bill or fee that must be paid immediately to avoid going into further debt. Simply having an accessible emergency savings fund is a way to greatly reduce your risk of finding yourself in even more debt after running into a medical emergency or an unexpected and hefty expense.
If you are having trouble keeping your head above water financially and you are not able to utilize additional resources or programs, you may be considering a debt forgiveness program. Debt forgiveness programs are currently available in the US and often require individuals to go through bankruptcy court in order to progress with their current case and claims.
What is Bankruptcy Court?
The bankruptcy court is a court system that assists individuals and business owners alike in the process of managing financial disputes or filing for bankruptcy. The bankruptcy court in the US provides US citizens with the option of filing for Chapter 7 Bankruptcy as well as Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the process of alleviating all of the debt you have accumulated to your name or with your business in exchange for property or other assets you own with debt forgiveness solutions. If you do not currently have any disposable assets to your name, it may still be possible for you to file for Chapter 7 bankruptcy if you are willing to allow your credit score to take a hit. In some cases, it may take an individual up to 7 years to fully rebuild their credit score after filing for bankruptcy depending on the circumstances surrounding their case as well as their personal history with financial struggles or debt.
Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy is another solution available from the US bankruptcy court. With Chapter 13, an individual is required to enter into a new debt repayment plan to pay back their debts in a set amount of time. Debt repayment periods may last up to 60 months, or 5 years, depending on the amount of debt you currently have to your name. If you successfully make all of your Chapter 13 payments required by creditors and debtors throughout your debt settlement and repayment program, you will then be cleared of your debts.
Choosing the Right Solution for You
When you are faced with the choice between filing Chapter 7 bankruptcy, Chapter 13 bankruptcy, or working with debt reduction, debt forgiveness, and consolidation companies, making a decision can quickly become stressful and overwhelming, especially if you are inexperienced in the field. Working together with a professional is one of the quickest ways to alleviate stress and worry associated with financial debt and monetary stress. If you are not sure where to begin when it comes to finding financial relief you need, reach out to a professional debt analyst or financial management provider to gain the relief and peace of mind you deserve.
Debt reduction and debt forgiveness programs and resources are also available to individuals who are unsure of what to do next when it comes to tackling and paying off their debts. Not all debt programs operate in the same manner, which is why it is so important to familiarize yourself with your options and to work with a professional debt analyst to determine the best route and course of action for your debt individually.
Some of the most common types of debt reduction programs include:
- Working With an Individual Creditor – If you have a small amount of debt to your name, or if you have only accumulated debt with one company, a debt reduction program that works with individual creditors may be right for you. An individual creditor relief program provides you the opportunity to lower your interest rate or the total amount of debt you owe with a debt reduction program or negotiated payment amount in place.
- Debt Consolidation – Debt consolidation is one of the most popular solutions available for those who are seeking to minimize or eliminate their debt altogether. Debt consolidation relief programs help individuals to consolidate all of their debt into one affordable monthly payment. By making payments on time and consistently, you can chip away at the debt you have accumulated.
Pros of a Debt Relief Program
Some of the advantages and benefits that come along with choosing a debt reduction program to minimize and eliminate your debt include
- Free Consultations – Receive a free consultation from the professional you are working with or the nonprofit organization you are using to seek debt reduction or debt forgiveness.
- Lower Monthly Payments and Overall Interest Rates – In most cases, a debt consolidation company has the ability to help with lowering not only your monthly payment on the debts you have accumulated but also the interest rate you are required to pay as well.
- Chip Away at Your Debt – Depending on the debt reduction program or provider you have chosen to use, it is possible to chip away at your debt slowly or by consolidating all of your debt into one lowered monthly payment. Always inquire about the options you have available with the professional debt analyst or financial specialist that you have chosen to work with on your debt.
- Stop Receiving Calls From Creditors – Are you sick and tired of receiving nonstop calls from debtors and creditors? With the help of a relief or consolidation program, regain complete control over your finances, and stop the incoming collection calls in their tracks.
- Start Over Again – Debt and financial stress are extremely hard on individuals. Feeling stressed about your finances, paying bills, and simply staying above water financially can quickly become overwhelming when you feel as though your life has spiraled out of control. Working together with a debt professional or seeking out a debt reduction program that works to your benefit is a great way to find the relief you need to move on with your life. Getting a clean slate and starting anew financially is a breath of fresh air and will help you to feel the relief you need to begin managing your finances and future debts more responsibly.
Cons of Debt Relief Programs
While many debt relief programs provide a number of benefits and advantages, it is also important to note that some programs do come with drawbacks. Some of the most common drawbacks of a debt reduction program may include
- Fees – Most professionals and debt relief programs will require clients to pay a fee for the services that they render. If you are unsure of how much a debt relief program or professional is charging, it is best to inquire about the total fee or amount you will owe for your services upfront.
- Time – Unfortunately, while debt relief programs can come in handy for those looking to get themselves out of a long-term financial bind, it may require anywhere from three to five years to finalize your debt consolidation program. If you are not willing to wait anywhere from three to five years, it may be best to seek an alternative route when it comes to paying off your debts and improving your overall financial health.
- There Are No Guarantees – If you are searching for a debt relief program or solution that is guaranteed, a debt consolidation program may not be right for you. While not all debt relief programs are guaranteed for everyone, they do have a high success rate for most individuals in need of serious help.
Having the ability to properly and effectively manage your finances is essential, especially if you intend to apply for and use credit cards or other debt that you have taken out in your name. Once you are familiar with programs, resources, tools, and solutions that are available for you to use while managing your finances, it is much easier to find a debt relief route or program that is right for you.
Familiarize yourself with various debt forgiveness, debt reduction, and debt relief options to regain complete and total control of your financial outlook and future.