Everyone wants to pay off debt fast because it is a burden that prevents that person from moving forwards with their life. One of the key factors in terms of getting personal finances back in-order is clearing revolving debt (a source of borrowing without a defined term, such as unpaid credit card debt). It is essential that a repayment goal is established if the borrower wishes to enjoy success.
Pay Off Debt Fast
There are several ways to successfully tackle unsecured debt. These include improved budgeting, finding ways to make extra income or through a debt relief program. A Debt Management Plan and debt settlement program are a means of establishing a level of repayment that is affordable to the borrower. However, this will affect credit score ratings because it involves defaulting on the original terms of an agreement.
Filing Chapter 7 Bankruptcy
Those who have an income that is below the state median and minimal non-exempt assets (valuable collections, second home etc) can pay off debt fast. In fact, it is possible to become completely debt-free in just four to six months without making any repayments. This debt relief solution is not available to those who have filed in the previous eight years, but this isn't a bar to filing under chapter 13.
Debt Settlement Program
A financial professional will negotiate with creditors in order to secure a reduction in the principal (amount owed) of up to 50%. This won't need to be paid provided that the agreed repayment level is maintained for a 12, 24 or 36 month period. The debt settlement company takes its 15% management fee directly from monthly contributions. Avoid any plan that front-loads fees (charges them up-front).
Debt Management Plan
Although there won't be a reduction to the principal, the borrower will make a repayment to creditors that is based upon affordability. The majority of creditors are normally prepared to freeze interest and charges to help pay off debt fast. A Debt Management Plan is normally a better way to deal with smaller sums of money because none of the debt is written-off.
Low Interest Debt Consolidation Loan
Consolidating debt with a loan usually means that the borrower will benefit from a lower rate of interest. It also provides a defined term when the debt will be completely cleared. However, individuals who already have a poor credit history are likely to find that a debt relief program provides a better way of clearing unpaid credit card debt. This is because the rate of interest offered will be far less favorable.
There are no easy ways to pay off debt fast, but there are some excellent ways to become debt-free. Talk to a qualified credit counselor to establish whether a low interest debt consolidation loan, debt settlement program or Debt Management Plan is the best way to proceed. Think carefully before turning unsecured debt into debt that is secured on the family home.
Sources
"United States bankruptcy courts." U.S. Courts.
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