Acquiring too much debt can put a major strain on a household. To eliminate debt, many people consider bankruptcy. With the new bankruptcy laws, it has become difficult for some people to eliminate debt. However, many will continue to qualify for bankruptcy protection. The effects of bankruptcy are long term. Before considering bankruptcy, it helps to explore solutions to debt elimination. Here are three tips that can help reduce debts.
Limit Credit Card Use and Pay More than Minimums
People file bankruptcy with varying credit amounts. Some have acquired over $10,000 of credit card debt, whereas others only have about $2,000. Individuals with small debts can usually payoff the balances without bankruptcy. However, these persons must be willing to make sacrifices.
If attempting to eliminate debt, stop using the credit card. Paying only the monthly minimum, and then going on a shopping spree defeats the purpose. Before you can successfully eliminate credit card debts, you must commit to using cash for all purchases. Additionally, the majority of minimum payments barely reduce the finance fees. To notice a significant reduction, endeavor to pay the minimum payment, plus an additional $50 – $100.
Negotiate a Lower Interest Rate
If you have maintained a good payment history with a credit card company, attempt to negotiate a lower interest rate. When contacting the credit card company, highlight your history with the company such as length of credit account, payment history, etc. If your credit is good, the company may consider a reduction. Before approving the request, you must consent to a credit check.
In addition to evaluating your history with the company, they will also assess whether you maintain a good payment record with other creditors. If your credit score is low, it may require the help of a debt consolidation agency to convince creditors to lower interest rates.
Once your credit card interest rate is lowered, you pay less finance fees. Thus, a larger portion of your monthly payments will help reduce the outstanding balance.
Consolidate Debts with a Home Equity Loan or Refinancing
Owning a home provides a huge advantage. Homes increase in values, thus they gain equity. As a homeowner you have the option of tapping into your home’s equity. Through a home equity loan or refinancing, you have the chance to get hold of a lump sum of money that can be used for different purposes. One such purpose includes debt consolidation.
Also, try using one of ABC Loan Guide’s
Recommended Credit Card Debt Elimination Companies.
Everyone deserves a second chance. Gaining bankruptcy protection may clear up your debt and get you started to form a better credit for your future. It is a real solution for so many people and you should talk to one of the Tampa Bay bankruptcy lawyers about your options for debt relief. The Tampa Bay Bankruptcy Bar Association has over 300 qualified Tampa Bay bankruptcy lawyers to help with all your questions and to get you headed towards a better debt free life.
Once you’ve established that you are indeed filing for bankruptcy and you’ve obtained help from one of the Tampa Bay Bankruptcy lawyers then you and your lawyer will decide what form of bankruptcy you will seek relief from. The most common personal bankruptcy is Chapter 13, which is also known as a wage earner’s plan. When you file for Chapter 13 any foreclosures or repossessions pending are immediately stopped.
Your Tampa Bay Bankruptcy lawyer will represent you to the courts and get your payments and arrears consolidated giving you anywhere from 3 to 5 years to get them paid off. While you’re under bankruptcy protection you don’t have to deal with creditors harassing you or more incurring late fees.
If you decide to file for Chapter 7 this is a good way to eliminate most of your unsecured debt but still allows you to keep your personal belongings and your home as long as you’re current on these debts. It’s usually very easy to reaffirm these debts and still eliminate the unsecured debts like medical bills, credit cards, some personal loans, etc. Although your bankruptcy will remain on your credit for 10 years establishing new credit can begin immediately. Most of your debt will be eliminated when your bankruptcy is over and you can’t file again for 8 years, which makes it a little more enticing to those who you seek to gain new credit from.
Over a million people filed for bankruptcy last year and of course they are not all homeless so that goes to show you that you can have a better future after bankruptcy is over.