Home Money Debt Resolution — What Option is Best For You?

Debt Resolution — What Option is Best For You?

by Jeremy Holcombe

More American are in serious debt today than ever before, as credit lines, loans, and other ways of making ends meet become a larger part of day-to-day life. So many of us are looking for the best debt resolution options. Why? Because you want to get out from under your the mountain of debt.

Having credit is a good thing. It helps in  emergency situations. But many families and individuals are unable to keep their credit debt in check, especially with the cost of living.

There are various options available for debt resolution. The one you choose to use will be based on your situation, and what you are looking to accomplish. Here are three options you may want to consider to help eliminate your debt.

Debt Resolution Options

Singular Loan: The #1 option for many is to take out a singular loan, and use that to pay down all the other debt they have. This is an excellent option if you are still able to secure the size of loan you will need. Of course, you will also have to be disciplined, as you will still have all your credit cards available to you when they are paid off by the singular loan. Avoid this option if you will only end up opening the new loan and then running up all your cards again, as this will lead to even more debt.

Consolidation Loan: The consolidation loan option is actually very popular with individuals and families. There is one BIG catch though — most, if not all, consolidation loans require that all the accounts covered by the loan MUST be closed. This is done for a couple of reasons.

  1. It can help you secure a larger amount of money, when a financial institution knows you will be closing other lines of credit.
  2. A financial institution is much more likely to loan you the money when they know their consolidation loan is the only loan you will be paying back.

Some individuals avoid this option because they are scared their credit will be affected for too long. This simply isn’t true, as your credit score will only be impacted for about a year before you can start to build credit again.

Bankruptcy: No one really wants to file for bankruptcy, but sometimes it is the best choice. It is there for a reason, so use it to start over if it’s the right choice for you. Bankruptcy should still probably be your last option, after you have looked at some other alternatives — but even if you decide to go this route, it isn’t as bad as you may think. There are a few bankruptcy options to look into, so make sure you do your homework before you jump in. A couple of things to remember when filing bankruptcy:

  1. Yes, your credit will be affected for a few years, but it isn’t the end of the world — and it is a great way to start over with a clean slate.
  2. Student Loans are NOT covered in bankruptcy, so if you have those you will still need to deal with them.

There are a few great debt resolution options available at your disposal, so when you feel like you need to make a move and get rid of debt, check out the options above and start making plans.

You may also like