How to Get Out of Debt: Debt Relief from 3 Unlikely Sources

[May 1, 2009.]

 

The credit crunch has many consumers clamoring for assistance. According to CreditCards.com, credit card debt reached $972.73 billion in 2008, including both general purpose and private label credit cards. And finding relief from high APRs and minimum monthly payments is tougher than you might think.

However, the good news is that it is possible to escape the debt trap--and you don’t have to go it alone. There is currently a wealth of resources to help you curb your spending, create an action plan for reducing your debt, and show you how to live well without borrowing. Here are three resources you may not have considered that can save you from a lifetime of fiscal servitude.

1. Your Credit Card Holder. Surprised? Don’t be. The public scorn of outrageous account terms and conditions have softened up the most hardened lenders. The Get Rich Slowly blog advises you to simply call them up and ask for a renegotiation of your terms. That precisely how APRs get lowered and debt relief is realized. Your company is playing hardball? Find an online credit offer and use it as a negotiation wedge. Lenders would much rather work with you to find a way to repay them than lose your business to another company or see you lapse into bankruptcy.

2. Credit Counseling Entities. The Federal Trade Commission is all over this resource. Credit counselors are for those who find it almost impossible to set a budget and get out of debt. They offer a debt management plan (DMP), which is similar to a layaway strategy. In the process, you deposit money each month into an escrow account managed by the credit counseling organization. They take that money and use it to pay your unsecured debt based on a plan worked out between them and your lenders. And the best part is that most credit counselors are not-for-profit.

3. Chapter 13 Bankruptcy. Forget the stigma. New federal regulations are making this form of bankruptcy more palatable. If you have a steady income, you can get out of debt and enjoy a fresh start with your finances without giving up your home or car. The filing fees for a Chapter 13 are around $274 plus attorney fees. Many attorneys will put you on a payment plan if you can’t afford the bulk of the bill.

The bottom line is that you must pay what you owe. However, these are three ways you can reduce the amount that repayment will cost you. And that could mean the difference between freedom in a few years or a lifetime of debt.

 

About Author:

Kelly Richardson is a freelance writer, marcomm consultant and digital entrepreneur. He’s written content for Fortune 500s Google, Yahoo!, Microsoft and Wells Fargo. Find out more about him at kellyrichardsoncopywriting.com.