Debt Solutions - The Options

The need for Debt solutions has never been greater. Latest statistics from the Office of Federal reserve in the US shows that over 200 million American are in debt to the tune of $2 trillion. That comes to about $18, 654 per household. This debt does not include mortgage payments

In the UK, the National Consumer Council reports that 1 in every 4 struggles month in month out to pay house hold bills, and other credit requirements. This is against a background of a mounting UK consumer debt that has since past the £1 Trillion mark, meaning that every man, woman, and child in the UK owes over £16000.00!

If you are struggling with your finances, do not let things degenerate and scuttle your happiness before seeking debt solutions tailored to your personal circumstances. If you have any of the following signs, then you must act now. Take a go for a debt management solution.

The best part of it is that you can get most of these debt solutions sorted on your own with little guidance for free.

Sure Signs That You Need To Seek Help Now

You need to review the available debt solutions and decide on the right debt management step for you if you owe more than $1000 or £500 and find yourself:

• Struggling each month to pay your bills
• You are living on credit cards
• Transferring balances around credit cards, without any obvious reduction in your overall debts
• Not sure of how much you owe in total
• Being chased by debt collecting agencies
• You can not get credit
• Always arguing about money
• Financial problems are bringing strain and stress to your relationship and or work

Could credit cards be the major cause of your debt problems? Then see practical credit card debt solutions to implement.

Debt Solution Options

The following are available debt solutions or debt management steps to overcome worrying debt situations :

1. Do Nothing.

   This is a no option, though quite a few just take this option, and calls it a bluff. If you are seriously in debt and not receiving any wage or have become unemployed, without any asset, property, or do not wish to borrow credit in the future, doing nothing may not bring you to further financial difficulty. Your creditor (s) will be very reluctant, and indeed unsuccessful in bringing legal action against you, as they would not be able to make any collections from you through the courts.

   With numerous debt solutions today, there are more honourable debt steps to take, as shown below.

2. Personal Debt Solution Plan

   This will be a first and most advocated debt solution plan. You recognize the need to halt the growing debt problem by instituting personal debt solution plan and there by help restore your financial health and avoid possible bankruptcy. Personal debt solution plan will involve drawing up a tight budget to reduce your monthly spending, analyze your spending habits and cut off expenses that can be avoided like unsubscribing to cable TV, reduce how much cigarette you smoke per day if you smoke, stop using credit cards, use of public transport instead of car, changing your telephone provider or re-routing your calls through a cheaper provider, taking food to work instead of buying lunch from the restaurant, and other steps mentioned on how to avoid bankruptcy.

3. Debt Consolidation

   This is the taking out of a lower interest loan to pay one or more loans with higher interest. Debt consolidation is a very popular and smart way to manage ones debt. You can get a debt consolidation loan from banks, building societies, or even by taking out a new credit card.

   With the presence of zero percent (0%) credit cards offering zero percent interest on balance transfers for 6 – 18 months, it may be a wise step. But debt consolidation may not be an option for some. Please read more on debt consolidation to determine and decide if it is the right debt management solution for you here

4. Home Refinancing or Re-mortgaging

   This may be another option if you own a property, and can not get a debt consolidation loan. You can release the equity on your home and raise cash to pay off all or part of your debt. This debt solution step has the added advantage that home loans or mortgages are usually at much lower rates compared with the traditional loans. You may then decide to fix the term of your mortgage to as a guide to fluctuating interest rate. Please discuss this option fully with your financial adviser or a mortgage expert.

5. Debt Settlement Negotiation

   Debt settlement solution is the next reasonable debt management solution, if you are unable to secure a debt consolidation loan either due to bad credit of just because you think you can not go on carrying the burden of the full debt any further or not happy re-financing your home to release equity,.

   Debt settlement involves you call up your creditors or writing them and asking them to agree on a settlement plan with you to pay only a part of your debt over a period of time, paying a monthly or weekly amount you can afford.

   If you really find your self in a dire financial straight, this may be an option for you. Do not feel timid about it. Go for it. You could even get a debt management company to do this for you. Creditors tend to agree to a debt settlement proposal because they know that it may also be a safer option for them too, to get part of their money, without having to loose everything.

   Some times, and depending on the country, debt settlement solutions may be agreed without it reflecting on your credit report. In such case it will not affect you. In other places, this may show up in your credit report, thus affecting your eligibility to get future credit.

6. Individual Voluntary Arrangements (IVA)

   Individual Voluntary Agreement or IVA is the next step just before bankruptcy in the United Kingdom. It is also known as "friendly bankruptcy". In Scotland, it is called Protected Trust Deed. IVA or Protected Trust Deed in Scotland, is a formal proposal made by a debtor to creditors via a licensed "insolvency practitioner" so that the debt can be repaid according to what is affordable over a period of time, usually 3 – 5 years. This arrangement is only possible through the use of the so called insolvency practitioners, and they often deduct their fee from the repayments made. Be very careful of choosing your insolvency practitioner, if you choose to go this route. There are many rouge practitioners out there.

   It is a better option than bankruptcy, but it comes with a price, in that you may have little or no access to credits while this arrangement lasts. It is by far more dignifying than bankruptcy.

7. Bankruptcy

   This should be the very last resort to solving your debt problems. Bankruptcy is a legally declared inability to pay what you owe. This frees you from been harassed in any way by your creditors, and debts are written off. It however means that you can not have access to credits for at least 10 years, and portrays you as a bad borrower. Filing bankruptcy comes with a very heavy price that may shatter one’s financial and possible social reputation. Nevertheless, it could be the only way out of a crushing debt burden for millions. It is worth avoiding, if you can, as a debt solution. It could affect your prospect of getting jobs and loans even after being discharged.

Carefully study each of these debt solutions and decide which will be best for you. You can get further help by speaking to a free debt solution adviser like the Greenpath Debt Solutions Services.