What’s Debt Relief?
The question of debt relief arises when an indebted party is struggling to settle obligations. Ideally, every debt that you accrue should have sufficient avenues of settlement. That’s a very ambitious presumption though.
Indebtedness is a situation to always run away from. Unfortunately, it always catches up with most of us
In March 2019 U.S. consumer debt rose 3.1% to $4.052 trillion. That surpassed last month’s record of $4.042 trillion.
Well, there has been a notable increase in debt levels due to credit cards and the high interest rates they charge.
Below, is a graph that shows an increase in GDP results on a quarterly basis over recent years. So, why an increase in personal debts as GDP is increasing? In retrospect, the increase in debts also comes at a time when:
That increase in debt is also due to:
- the rise in costs of living
- ease of access to credit card facilities
- Long-run stagnation of income levels
Whatever the stage, debt refief is always a welcome idea.
In total, how can you get yourself off debt?
Living debt free is an achievable state.
This calls for the use of debt relief tools.
That’s where debt relief programs adoptable by individuals help them towards eliminating debts.
The programs include;
Debt consolidation- which entails the combining of all debts into one.
Therefore, the payment is reduced to a once off monthly installment.
Debt management- which entails seeking professional guidance in debt management, it is based on the budgets available.
Debt settlement-this is the case where third parties are seeking to negotiate with the creditors. This is the riskiest form of debt relief.
Personalized debt relief-this is simply a scenario where the individual crafts an own plan. The target of the plan is to settle the debts and be debt free.
The advantages of debt relief programs are as below:
They enable an individual or party to reduce and eventual; eliminate debt.
On the other side, the disadvantage is that the debt relief programs are not a sure guarantee or they promise no automatic results.
The debt relief programs can be compared to the following factors
Credit impacts-this looks into how the program will improve the credit score and the more it becomes a DIY (Do it yourself), the better.
Interest rates and fees- where the different programs charge varied rates and interests.
Lifetime costs-The longer the program takes to eliminate the debts, the more expensive it is.
Monthly installments-Here the debt relief programs view terms of what is payable on a monthly basis as installments for the settlements of debts.
The following are key points in the acceleration of debt relief.
Reduced spending- this stands out, if one is able to limit spending, this automatically reduces the amount of burden with respect to the need for debt relief.
Budgeting-planning out on sources of income and matching the same to spending is a sure way to stem from overspending, that will reduce the best burden eventually.
Boost your incomes drastically- if you happen to hold you’re spending constant and improve the incomes, then your debt burden has been done away with.
Selling off stuff that is not usable to you. This reduces your needs for space and may have a significant reduction in the resources that you require to rent out spaces for storage.
Planning ahead of taxation cycles- if you plan smartly, you may end up spending on allowable that reduces your obligations, or even eligible to obtain some refunds.
Both tax planning and refunds work adequately to reduce your debt burdens.
Always save and keep in saving-savings improves the levels of disposable income for you.
That income can then finds a smart channel into the reduction of pending bails, and by extension, the debt burden.
Refinancing- If you happen to have a smarter way to sell off your mortgage obligations, sure go for it.
Overall, your debt burden is significantly reduced.
The elimination of debt does not come by chance.
It requires knowledge and efforts to attain a debt-free state, which is even harder to maintain.