One of the leading causes of suicide and depression nowadays is debt. It can be overwhelming for anyone when creditors start hounding you. You should however not assume that you are the only one in debt. According to the latest statistics, household debt has ballooned in recent years to reach record levels while companies are being forced to declare bankruptcy at alarming rates. The first step in getting yourself or your company out of debt is to admit you have an issue and need help.
This help comes from agencies dealing with debt relief in cities like Miami in Florida. Debt consolidation, declaring bankruptcy, debt management, and debt settlement are some of your debt relief alternatives. Settling your debt is one of the best options if you want to avert an effect on your credit rating. With this option, your debt relief agency will negotiate with your creditors on the best methods of repaying your debts and at times get them to lower the outstanding amount. The following are some of the techniques the agency might recommend for settling your debts.
In this technique, you will start your debt settlement by paying off the loan with the highest interest rate irrespective of the debt’s amount. You will maintain the minimum repayments on other debts. Once you finish with the first debt, you will tackle the one with the highest rate among the remaining until all debts are paid off. The debt avalanche technique allows you to save cash on high-interest rate debts, but it can be frustrating if it takes time to pay off the debt with the highest interest rates.
Here, you will start with paying the smallest loan amount irrespective of its interest rate and maintaining the minimum payment on your other loans. After paying the lowest debt, you move to the next small one until you finish. The snowball debt repayment method has high motivation since you pay off debts quickly though you might end up paying more for your big debts.
This is a variation of the snowball method and works for those with no funds to make a lump sum payment of their entire loan. In the snowflake method, you will divide your smallest debt into installments for its payment and gradually move up to the next one. This burdens your cash flow less than the snowball method will but might take time to repay the loans.
Consolidation Loan Method
Here, you will take one loan from one lending institution to offset all your loans in one sweep. This leaves you indebted to one lending institution rather than multiple creditors. The debt consolidation loan leaves you with lower costs compared to having multiple small loans. It might, however, be hard to get optimal rates with your debt history and a poor credit rating.
You might have made financial mistakes which leave you in debt, but the above options offer a chance for you to correct your mistakes and start over. They might sound easy to handle but will sink you further into debt if handled carelessly. Get a debt management expert to guide you through the strategies to make them work for you.