Bankruptcy is an option for people who have acquired a lot of debt. While bankruptcy may eliminate your debt legally, it is extremely damaging to your credit rating. If you file bankruptcy, expect to pay higher interest rates on credit cards, vehicle loans, home loans, etc. However, this can be avoided. Here are a few tips to help you reduce your debt without bankruptcy.
Improve Bad Credit and Reduce Credit Card Debt
If you are hoping to improve your credit rating without bankruptcy - be patient. This may be a long process, especially if you have bad credit. Many people who file bankruptcy have a decent credit rating. The problem lies in the inability to repay large credit card and medical bills. However, there are ways to reduce debt over time.
Begin by paying more than the minimum balance. If possible, pay double and triple the minimum payments. Financially, some people are unable to pay larger monthly payments. Getting a second job is a great alternative. The extra money from your employment can be used to pay your bills.
If you have bad credit, begin improving debt by maintaining a current standing with your creditors. This involves paying monthly minimums on time. Do not pay creditors late. This harms your credit report. Additionally, avoid missed payments. If you maintain regular payments, your score will improve, and then you can begin paying more than the monthly minimums.
Eliminate Debt with Home Equity Loan
If you own a home, you have more options for eliminating debt without bankruptcy. Contact your mortgage lender and discuss getting a home equity loan or line of credit. These loans are ideal for eliminating or reducing debt. Moreover, getting these types of loans are much easier because your home secures the loan amount. Of course, if you refuse to repay the money obtained from a home equity loan, the bank has the right seize your property.
Free Debt Consolidation Company
If you do not own a home, consider contacting a debt management company. These companies are non-profit organizations who are dedicated to helping consumers eliminate their debt. With a debt management program, you can reduce your debt up to 70%. In addition, you can be debt free within a few years. All your debts are consolidated into one loan amount. Each month, you make one payment to the debt management company.
Here are our Recommended Debt Consolidation Companies Online.
Carrie Reeder is the owner of ABC Loan
Guide, an informational website about various types of loans.
