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

---

Learn The 15 Debt Elimination Steps You Must Take Immediately!

What Everybody Needs To Know...Learn The Truth About Debt Elimination... Read More

Life After Debt ? Strategies for Dealing with Problem Debt

Honorably and ethically rid yourself of burdensome debts using the... Read More

Credit Repair - Understanding The Basics

What is Credit?Credit means that you are using someone else's... Read More

IVA Information

If you're thinking about an IVA, it is essential to... Read More

The Effects of Consumer Debt

Consumer Borrowing Consumer borrowing in the UK has now crashed... Read More

Craving For Financial Freedom

Have you ever felt trapped in a Rat Race and... Read More

Debt Elimination 2

The First Step To Debt EliminationRegardless of your personal and... Read More

IVA Advice

An IVA (individual voluntary arrangement) is an alternative to bankruptcy... Read More

How to Get Triple A Credit in 25 Days

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

Different Ways Of Dealing With Debt

Bills, creditors, debt collectors. Are you yearning for the days... Read More

Debt Problems? You Can Negotiate With Your Creditors

It is always possible to negotiate with creditors ? even... Read More

Bankruptcy Abuse

Bankruptcy is little more than a smack on the hand... Read More

Debt Elimination 3

Planning To Achieve Debt EliminationOnce you have started the process... Read More

Credit Card Debt Freedom is Possible

Credit card debt have you drowning financially? You're not alone.... Read More

How Do I Lower My Debt Burdens?

How do I lower my debts?There are several ways of... Read More

Bankruptcy: Who is to Blame?

If you are considering bankruptcy as a solution to your... Read More

The Debt Free Lifestyle

Many people have been taught that you cannot get ahead... Read More

British Families and Debt

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

Credit Card Debt & the Unfairness of the Universal Default Clause

Let's look at a real world example: A woman purchased... Read More

5 Options Toward Debt Relief

If you are in debt, well over your head in... Read More

How To Get Out Of Debt

If you have found yourself in a position where you... Read More

Debt Consolidation and Personal Finances: Learn the Truth!

An inability to manage credit, growing debt and bankruptcy are... Read More

Bankruptcy 101

Bankruptcy still remains a mystery in the eyes of many... Read More

What Is A Chapter 13 Bankruptcy?

Many consumers that are bogged down in debt frequently turn... Read More

Your Secret Weapon... A Budget

For many, the word 'budget' immediately sends shivers down the... Read More

Corporate Debt Management ? Perspective on the Why

Entrepreneurs have a tough time in their formative years. They... Read More

New Bankruptcy Law ? Targeting the Wrong People?

Last April, President Bush enthusiastically signed into law the oddly-named... Read More

Bankruptcy: What You Need to Know

Personal bankruptcy is a legal way to give people with... Read More

Hide That Car! Fighting the Repo Man

Vehicle repossession may appear justified in circumstances where a person... Read More

Debt and Your Dreams

You may not realize what that credit card bill is... Read More

How To Pay Credit Card Debt Off

If you are determined to pay credit card debt off... Read More

The Human Side - Debt Stress

In all the technical discussion you hear about credit... Read More

Home Equity ? Foreclosure Often Not Necessary in Current Market

While driving around your community, you may have seen signs... Read More