How do I get rid of debt?
Credit Debt -Easy in - Not so easy out
As soon as you find yourself getting into credit debt, you need to begin planning your strategy to try and get yourself out of debt, or at least to buying yourself some more time in which to find ways of dealing with the situation.
The worst thing you can do, is not to do anything. Your creditors won’t know what is going on, other than the fact that you owe them money but you’re not paying any back. They’ll get increasingly more demanding until in the end they will threaten to go legal and take you to court.
The first thing you must do is to send out letters to creditors in debt delay tactics. If you have a lot of debt where you are in arrears with a number of various creditors, it may be well worth creating a cannot pay debt letter template.
The idea behind creating a template is that you use it again and again to write the same basic letter, changing only the name and address of the credit, the account references, the amounts, and the date. The important thing about this is that you are at least communicating with your creditors. You may not be telling then what they want to hear, but you are telling them something. In turn, they will reply to you, and you will have opened up a dialogue, so letters to creditors in debt repair mode will help.
I very often get asked how do I get rid of debt?; or, How can I get someone to pay off my debt for me?. Well, in terms of getting rid of debt, there are really only two options open to you.
The first is negotiating with, or hiring somebody else to negotiate with your creditors. Creditors can often be convinced to accept a lower amount back than you actually owe, but still clear the debt. This is called loan settlement.
Secondly, although somewhat drastic, there is the voluntary bankruptcy option. There are two routes to bankruptcy in the US. One is something called chapter 13 bankruptcy which is basically designed to give you more time over which to pay your debts off. The other is called chapter 7 and this relinquishes your home in return for cash which is then used to settle your debts.
Lastly, the most common way of getting someone to pay for your debt for you is something called debt consolidation. This is a process whereby you take out a loan that covers the total sum of all of your credit debts, but whereby the interest rates are lower than on the credit debts themselves, so you end up paying much less back per month. This doesn’t actually get rid of the debt, but it dies ease your cash flow situation.
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