What Solutions Are Available for Alleviating Consumer Debt?

There’s nothing worse than trying to stretch out the last few dollars in your pocket until your next paycheck arrives – except perhaps when the lion’s share of it is immediately wiped out in paying off your existing debts. Sadly, that’s a reality that’s facing more and more Americans today, with recent research revealing that over three-quarters (77%) of US households are in debt.

If that situation sounds familiar to you, it might feel like you’re constantly treading water or the ground beneath your feet is sinking like quicksand. Fortunately, there is a light at the end of the tunnel and there are ways to alleviate the financial burden placed upon you. Here are three of the primary solutions available to those struggling to meet their obligations and pay off their debt.

1. Credit Counselling

One option available to those lumbered with debt is to seek advice from credit counsellors. Normally employed by NGOs, these organizations can provide guidance to create a debt repayment plan, as well as assist you with budgeting and granting you access to your credit score. They generally employ trained and certified professionals who have considerable experience in the realm of consumer credit and can provide the latest advice based on your circumstances.

Although credit counsellors are not capable of wiping off your debt or even reducing the overall amount you owe, they can negotiate on your behalf to make your monthly repayments more manageable. They do this by asking lenders to lower their interest fees, delay or forego certain penalties and restructure your debt so that its payment becomes a more realistic goal for you.

2. Debt consolidation

If you owe money to a number of different providers and lenders, debt consolidation could be a viable option for making your obligations easier to meet. For example, if you have several different credit cards, each of which commands a high-interest rate and penalties for late or non-payments, it’s sensible to consolidate those liabilities into a single monthly repayment. Doing so will not only make the debt less cumbersome but can also grant you access to preferential interest rates.

Of course, it’s important to remember that each company is different and not all will offer a product that’s appropriate to your needs. For that reason, you should always conduct thorough research on the options available and compare the best debt consolidation companies based upon the rates they offer, the terms of their repayment plans, and the customer reviews of those who have had dealings with them in the past.

3. Bankruptcy

Filing for bankruptcy might seem like an extreme option, but there are certain scenarios when it makes the most sense. Indeed, it has steadily become more and more commonplace in recent decades, shooting up to an all-time high in 2005, when one in every 55 households in America declared themselves bankrupt. The benefits of doing so are that creditors will cease chasing you for monies owed immediately, giving you the respite that so many people desperately crave.

Of course, that respite comes at a price. Although all of your debts will be wiped, the bankruptcy may remain on your record for up to 10 years, which will be publicly available for anyone who wishes to view it. It’s not only finance providers who run credit checks on you, either; you might find that prospective employers are turned off by a bankruptcy filing and pass you over for another candidate due to your difficulties in the past. As such, it’s an option that should be considered very carefully before pursuing it.

For those up to their ears in debt, it might seem like they’re climbing a never-ending hill. However, by taking advantage of one of the debt solutions outlined above, you can turn over a new leaf for your finances and take the first steps towards getting back in the black.