If you are deep in debt, it may seem like the walls are always closing
in on you. Constant phone calls from creditors may shatter your sense of
well-being. The common feeling for those who are debt-ridden is abject panic.
The good news is that there are steps that you can take to get out of debt.
Granted, it will not happen overnight, but it can happen.
The first step towards getting out of debt is to get a handle on your finances. You need to figure out
exactly how much money you owe. After you have done that, then you should
figure out your monthly financial situation. Take some time to list out every
single expense that you have. Then, you can figure out where it is possible to
cut expenses. While you are trying to reduce your debt, you should cut items
that are not a necessity. The point of this exercise is to save a few extra
dollars every month in order to gradually reduce your debt. When you can chip
away at your debt, the effect may build on itself since the amount of interest
that you pay will also be reduced.
Once you have a handle on your finances, you will also then need to prioritize
which debts to pay first. This typically means that you pay off the debts that
have the highest interest rates first. The effect of loans with high interest
rates can be crushing since the amount owed may increase faster than you can
pay the loan back. At the same time, you should make the minimum payments on
the loans with the lower interest rates.
Sometimes, the amount that you take in every month does not allow you to get
out ahead of your debt. In that instance, you should consider selling some
possessions that are not needed in order to lower your debt. For example, if
you have two cars, you may be able to decide that you can get by with one car.
Again, the key is to make that first dent in your debt because the lower the
amount you owe, the fewer interest payments that you will have to make. Then,
you would be able to start to save some money the next month because your debt
costs are part of your monthly expenses.
If you find yourself in an even more perilous situation, you can attempt
to negotiate with your
creditors. There are costs for them to pursue you if you fail to repay what you
owe them. When they send your account to collections, they have to write off a
large amount of what you owe them, and the collections company reaps the
benefits of your repayment. Therefore, it may not be in the creditor’s best
interests to send your account to collections. They may be willing to forgive
some of your debt in exchange for certain repayment agreements or changes in
terms of your loans. You should at least have a conversation with them about
this prospect since you have nothing to lose. Either way, your creditors stand
to lose if you cannot pay your debt back.
In any event, you should consider bankruptcy to be a last option. You should try everything
within your ability to make your debt burden more manageable before you go down
this route. Bankruptcy will have long-term ramifications on your ability to get
credit in the future since it stays on your record for a long period. It could
also impact your ability to get certain jobs that require a credit check. While
you do get a fresh start, you may also have to sacrifice many of your assets
and possessions to achieve this.
One option for reducing your debt is taking out a debt consolidation loan. This
can have various positive effects. First, it can mean that you are dealing with
fewer creditors calling to hassle you. Second, it means that you may have a
greater time period to repay your debt. Third, it can reduce some of the higher
interest rate obligations that you have and replace them with one lower
rate.
Hornet Partners has broad experience in
working with borrowers to provide them with debt consolidation loans. They have
helped many borrowers on the road to becoming debt-free. Hornet Partners will
work with you to provide you with a solution that meets your particular needs.