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Debt relief comes in many forms: You can get out of debt
If you’re dealing with significant debt, it can feel difficult to handle. You may not be sure when you’ll be able to pay it back or how to pay back what you owe.
There are different options open to you. You might try:
- A snowball method, where you pay more on one debt while paying minimums on another until the first debt is paid off. Then, you could put that minimum payment onto your next debt, rolling your payments until you pay off all you owe
- Negotiating with your creditors to lower your payments or to forgive fees and penalties
- Consolidating your debts with a personal loan
- Taking a second job to make larger payments on personal debts
- Cutting down costs in your home, such as by using less electricity or cutting cable
These are all good options, but when they don’t work or aren’t enough, bankruptcy may be the right choice.
Bankruptcy also comes in a few forms. For consumers, the primary forms are Chapter 7 and 13. With Chapter 7, some of your assets will be liquidated to pay back a portion of what you owe. The rest of your unsecured, qualified debts will be forgiven.
With Chapter 13, you’re placed on an affordable repayment plan for three to five years. After that time passes, any remaining debts included in the bankruptcy are forgiven.
All of these options are a great way to get ahead on your debt and to get back to a more stable financial position.
How do you know that it’s time to consider bankruptcy?
You’ll know that it’s time to consider bankruptcy if:
- You’re starting to miss payments
- You have no income but are being harassed by creditors
- Other attempts to settle or negotiate debts failed
When you decide what you want to do, your attorney can go over a number of options for debt relief and make sure that bankruptcy is the right choice for you. There are some potential negatives, such as a reduced credit score, that will come from bankruptcy, but the financial freedom you’ll have as a result of going through this bankruptcy process may be worth it.