Excessive debt takes over the consumer’s life and makes it difficult to manage their finances. Some consumers experience financial ruin and take many years to rebuild their credit. Debt management solutions can show them how to settle their debts and regain their livelihood.
Home Equity Loans
Home equity loans give homeowners an option for getting a loan to settle their debts. However, the homeowner must have qualifying credit scores, adequate income, and have substantial equity built up in their homes. The loan is paid back in the same way that the mortgage is, and the consumer can borrow one lump sum. It’s a great opportunity for consumers with good credit to settle debts without going too far into debt.
Debt Consolidation Opportunities
Debt consolidation loans are a way to pay off debts by taking out a loan and paying monthly payments. The borrower can get a fixed-rate loan to keep the same payment amount throughout the loan contract. They must have qualifying credit scores of at least 620 for more lenders. However, there are lenders that will provide them with a high-interest loan that they can refinance once their credit scores improve. By using a free financial calculator, the consumer determines how much they should borrow to pay off their debt volume.
Reaching a Settlement
Some debt management providers can help consumers by negotiating for a better settlement. It is possible for them to cut the total balance by 50% and pay the balance via a lump sum payment or through a new installment plan. The service providers can negotiate with all creditors to get a better settlement offer and decrease the consumer’s debts dramatically. It could help them eliminate half of their debt volume quickly.
Using a Budget to Pay More on Debts
A budget is an efficient way to settle debts, but the consumer must save as much money as possible and apply it to their debts. This could mean cutting out shopping and entertainment from their budget. However, with spending cuts the consumer could pay off their debts in a shorter time.
Filing for Bankruptcy
Bankruptcy should be the last option since it can take over the consumer’s life for up to five years. With chapter 13, they enter a repayment plan that requires monthly payments to settle all debts. The consumer cannot use their disposable income as they wish, and they are required to pay debts that were not included in their case.
With chapter 7, the consumer surrenders certain assets to the court, and a trustee sells the assets to generate proceeds to pay their debts. The process takes up to six months, but the consumer must have enough assets to pay off all their debts.
Debt settlement opportunities help consumers get out of that hole and reclaim their lives. Financial issues can become stressful and shut the consumer off from new lines of credit. They also face limitations for major purchases such as homes. Consumers can learn more about the opportunities by contacting a debt management provider now.