Drowning In Debt? 4 Steps For Paying It Off & Avoiding Bankruptcy
Filing for bankruptcy isn't for everyone. If you have several assets, plan to buy a home, or don't have enough debt to file, you need to explore other avenues that allow you to repair your credit. If you have bad credit due to debt and you want to fix it without filing bankruptcy, here are 4 steps for paying off your debt.
1. Refinance your home
If you have a large chunk of your home paid off, refinancing your home will allow you to lower your payments and use some of the money you're saving to start paying off your debts. When you refinance, you're basically financing what you have left to pay off, and starting a loan term over from the beginning. If you have five years left on your mortgage, you don't have to start over with a 30-year loan.
You may be able to refinance into a 10-year loan and practically cut your payments in half. If you don't mind stretching it out even further, you may be able to do a 15-year loan with very small payments. It may be frustrating to add time to your mortgage, but it's worth it if you can avoid filing bankruptcy or even possibly foreclosing on your home.
2. Cut back on expenses
This is the age of technology. Most people have smart phones, high-speed internet, and digital cable or satellite. It may seem like you can't live without all of those things, but you'd be surprised what you can sacrifice when you have to. Cut back the bills that aren't necessary for survival.
First, think of other ways to watch television. You can buy a digital antenna for your home. It will provide you with local channels without the monthly bill. Antennas come in mileage. For example, you can buy an antenna that picks up channels 50, 100, 150, or more miles away. Pick one that will reach to the closest major city for the largest number of clear channels.
If you have a smart TV or gaming console, you can purchase monthly memberships to television streaming companies for only a few dollars a month.
Finally, check your internet connection speed. Make sure you aren't paying top dollar for the fastest speed available. Unless you have a home business that requires it, it's unnecessary. Switch to the lowest speed and see how that works for you.
3. Negotiate with creditors
Before you start writing checks for the bills coming to your home, call your creditors. Creditors are always willing to negotiate. You can save hundreds on each bill that you have just by calling and asking them for a settlement amount. Sometimes you can counter-offer and they'll agree to the amount that you give them as long as it is reasonable. After negotiating with all of your creditors, you may knock thousands of dollars off your debt. Just be sure to make the payments that you agree to. The settlement amounts can disappear and you may end up with the full bill if you don't stick to your payment arrangements.
4. Call a credit counselor
Credit counselors are skilled individuals who can offer you advice on paying off your debt and rebuilding your credit. Some agencies will even contact your creditors for you to negotiate your debt. The credit counselors will put all of your bills together and tell you exactly how much to pay and how often. Credit counseling services are very helpful when you feel like you're drowning in debt and have no idea how to get out.
Bankruptcy is not your only option. Paying off your debt is possible as long as you take the time and do the work. Call a credit counselor, negotiate your debts, sell your valuables, and cut back on expenses. It may seem like a hassle, but once you're debt free, you will be happy you took the leap.