There are many different types of debt relief. If you thought there were only a few types of debt relief you’d be wrong. Dealing with debt has an unlimited number of strategies or combination of tools that can you can use.
You can divide the types of debt relief into the following main categories.
Types of Debt Relief
The most common forms of debt relief that come to mind are the ones advertised and promoted the most. These include credit counseling, debt settlement, and bankruptcy. In each of approaches, someone else has to get involved to make it happen. No creditor has to agree to any solution when it comes to credit counseling or debt settlement.
Bankruptcy uses the law and provides power to people to force creditors to agree to end their debt or accept a partial payment plan. Bankruptcy is often vilified because it does give power to debtors which creditors are not excited about.
With credit counseling and debt settlement, the vast majority of people who enroll in such programs do not cut all their debt. See The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.
Dealing with your expenses is another way to find debt relief. Reducing the amount of money you spend can increase your available cash. Trimming your expenses might sound like the easiest thing to do to deal with your debt. Most people do it all wrong.
A budget built in a financial panic is going to cut out all the things you might feel is a luxury. These budgets fail because they are not sustainable. After a period of time, the starvation of things we find comfortable can cause us to slip backward.
So rather than cut out all things you might find optional, cut back instead. The best way to deal with expenses is not to make a which will fail. Instead think about building a spending plan that will succeed because it fits your life.
Focusing on the debt alone is not the best approach. Focus on also increasing your income to have extra money each month to tackle your debt.
If you can cut expenses and increase your income you can add a lot of extra cash to your pocket each month.
One quick way to boost your monthly income is to take a look at your income tax refund you get every year. Do you get a big tax refund back each year? That’s a mistake if you are struggling to make ends meet each month. What you can do is change your tax withholdings so you can put more in your paycheck.
Dealing With Underlying Issues
Debt is the symptom and never the problem. Debt is the result of something else and not the main problem. Sometimes debt happens when we have low self-esteem, feel bad about ourselves, want to reduce stress, are in bad relationships, or depressed.
Losing a job creates debt. So does unexpected medical bills, or an unexpected accident.
Getting a new better paying job is a form of debt relief. So is getting better insurance, or dealing with emotional issues.
Understanding the variety of debt relief options and taking action to change your life to get rid of your debt will be tough.