Bankruptcy is a scary concept for everyone. Unfortunately, for many consumers, it's not just a concept, it's a reality. The simple fact is, the recent financial recession has made it almost impossible to survive financially for many people. As a result of this, tons of people have racked up debts that they don’t see any way of paying back any time soon. So, one thing constantly looming on the minds of these consumers is, "Will I be able to avoid bankruptcy?".
Although not everyone will be able to entirely avoid bankruptcy, most people asking the question will. That is, if they follow the right steps to realizing debt relief. That being said, here are 3 great ways to get your debts paid off, and hopefully avoid bankruptcy.
Option #1 - Debt Consolidation
Debt consolidation is a great process that's really been getting a bad rap lately for some reason. I think the biggest reason for this is the adverse effects it may have on consumer credit scores. The simple reality is, no debt relief program is going to have a positive effect on credit scores. That being said, debt consolidation is a great way for many to dig their way out of overwhelming debt.
There are 2 forms of debt consolidation. The first is to consolidate your debts all in one debt consolidation loan. The other, and more popular form of debt consolidation is negotiation and management driven. In this form, the company you hire will negotiate hardship interest rates with the lenders you owe money to. Once all is negotiated, they will give you 1 lump sum payment to send. That payment will be sent to the debt consolidation company and they will administer payments to the lenders. This process generally leads to lower interest rates and lower monthly payments.
Option #2 - Sell A Structured Settlement
Although, not everyone has a structured settlement, those who do can really make it work for them in times of overwhelming debt. Instead of settling for bi-weekly or monthly payments, it's possible to sell your settlement payments and get one big lump sum in return. In this case, you could use the lump sum payment that you receive as a way to pay off your debts in full, or pay them down to a manageable amount.
Option #3 - Debt Settlement
The final option, debt settlement is looked down upon by many. However, it's been the key to debt relief for tens and possibly even hundreds of thousands of consumers. Using this option, you would hire a company that will help you through the process of settling your debts for pennies on the dollar. Often times, debts can be settled for as little as 30% of the total amount owed.
Although there is a lot to this process, I can provide a short, to the point breakdown. Instead of sending your lenders payments, you would send them to the debt settlement company. Those payments will be held in a SPA (Special Purpose Account) until you had enough to pay off the settled amount of at least one of your debts. At this point, the debt settlement company will call the lenders you owe money to and make an attempt to negotiate the amount owed on the debt.
When you're in debt, it may seem like there’s absolutely no way out. The good news is, there is a way out. Not just one way, but many. Now, it’s up to you to do your research and find the option that works best for you!