Many Americans struggle every year with mounting debts. If you find your bills have gotten out of control, it’s time to consider how you can free yourself from them. Here are five tips to help you get relief from your crushing debt:
- Renegotiate payment plans by yourself.
If your repayment plans and interest rates have grown too high for you, contact your creditor to see if they will work with you on a new payment plan. Creditors are just as interested in getting your debts paid off as you are, and they would likely prefer that you make a monthly payment, even a smaller one, rather than just avoiding payments altogether because you can’t afford them.
The downside of this option is that your creditors can say “no,” leaving you where you started. If this happens, there are some other options to consider.
- Apply for a debt consolidation loan.
A debt consolidation loan will consolidate all your debts into one lump sum, and you will make a single monthly payment each month. It’s possible that the loan will have longer repayment terms, allowing you to choose a monthly payment amount that is more affordable. Additionally, you might get a lower interest rate than your other debts, so you might save some money.
While a debt consolidation loan is a convenient and attractive option, it’s important to remember that having a longer repayment period may mean you could end up paying even more on your debts than if you had keep previous repayment plans and interest rates. For those who are struggling with payments or those who would benefit from having just a single monthly payment, debt consolidation loans are an appealing option.
- Work with a credit consolidation company.
Using a consumer credit counseling service is another viable choice if you need help repaying debts. Like some of the other options, a consumer credit counseling company allows you to submit a single payment for all your bills. In this case, you would send your payment to the company, who would disburse the funds among your bills. The company also might work with your creditors to lower your interest rates or reduce the amount you owe.
While some debt relief options won’t require you to pay a fee, a consumer credit counseling service most likely will. Ohio law allows consumer credit counselors to charge a one-time initial fee of up to $75, an annual consultation fee of up to $100, and a monthly fee that does not exceed 8.5% of your monthly payment. However, many companies violate Ohio’s law by charging a fee far higher than 8.5% of the monthly fee, so it’s extremely important for you to thoroughly research the company and make sure its practices are ethical before you agree to work with them.
Even if the company you choose is compliant with the law, you will likely pay more in the end when you engage the services of the company. However, some people might need the help of a third party to structure payments for them, or they may appreciate the fact that one single monthly payment will cover all of their debts.
- Develop a robust repayment plan.
Just because you are in debt does not mean you are irresponsible with money. Often people find themselves in dire financial straits because of an emergency, such a medical problems or car issues, and they now need to find a way to dig themselves out. Developing a repayment plan on your own is certainly the least expensive option.
But creating a budget can be difficult for some, and it may involve making some sacrifices, such as packing your lunches every day or cancelling your cable. If you don’t think you can be responsible with your budget, you might need to turn to a third party who has experienced working with people in debt.
- Consider bankruptcy.
Your debt may be too great, and your payments too far behind for any of the above options. In this case, it might be best to file for bankruptcy. Depending on which one you choose, a bankruptcy can either help you repay your major bills in a 3-5 year period, or can allow you to wipe out much of your debt entirely.
Bankruptcy will initially have a negative impact on your credit, and will show up on your credit report for several years after. However, you can begin rebuilding your credit right after your bankruptcy discharge, so you don’t need to worry about suffering from any lifelong negative effects.
How An Ohio Consumer Debt Attorney Can Help You
These five choices are not all you have to consider. There are other opportunities for debt relief. Speaking to an Ohio consumer debt attorney may help clarify your options and point you to the right plan for you needs. The attorneys at Luftman, Heck & Associates can offer a free consultation about your case. Call us today at (888) 726-3181 or email us at email@example.com.