How to Pay Off Debt

CONSOLIDATION LOAN

This is a traditional loan consolidation where you would simply receive money to pay off your accounts and then have a new loan and payment to make each month. This loan may carry a lower interest rate than your debts. You make fixed monthly payments on the loan until it is paid off.

CREDIT COUNSELING

Is a simple program where a counselor reviews your financial situation and helps put together a plan to help reduce interest rates usually between 6-14% with your creditors if possible, and creates a debt management plan for you to follow. This plan will help you become debt free in 5-7 years.

DEBT SETTLEMENT

This is a program where the focus is reducing the physical balances owed. The company negotiates with your creditors to accept less than the debt owed. That amount is then paid to creditors, from the account you deposited into, until the debt is resolved. This plan will help you become debt free in 2-4 years.

BANKRUPTCY

Most of the clients we speak with are trying to avoid Chapter 7 & 13 bankruptcy. This has the most negative impact on your credit report and public profile. Future lenders and employers will ask about this and it could impact future lending or employment. If Bankruptcy is something that you are needing, you will want to speak to a local attorney to see which Bankruptcy you qualify for and what the costs and process would be for that program.

CASH-OUT REFINANCING

Many homeowners had equity to be able to take out because the housing values were increasing and obtaining a personal loan was easier because U.S. Citizens were making more money and had stronger debt to income ratios. The debt to income ratio is one of the main factors any lender looks at when approving you for a loan or refinancing your property. Your debt to income ratio is what you earn per month versus how much you spend per month. If there is very little left over, you are less likely to qualify because you are considered to be over-extended.

DO IT YOURSELF

This option is very simple and that is to keep doing what you are doing. Many people look at their credit card statements and see how many years it will take and how much it will cost if they simply keep making the minimum payments. Rule of thumb is that it takes about 1 year per every thousand dollars owed if no other charges are incurred. This can commonly be around 20-30 years and the cost is usually 3 times the amount owed due to all interest charged. One of the biggest factors of your credit score is your debt to credit ratio. Your debt to credit ratio is how much of the limits on the credit cards you have used and how much is remaining.