Debt Reduction Is the Best Way to Being Debt-Free
By: Ajeet Khurana
Debt problems do not last forever. You may be indebted today, but could soon be debt-free. But in order for you to clear your debt once and for all you have to be in it for the long haul. Debt is easy to accumulate but hard to eliminate. Be ready to make the effort to reduce your burden of debt. Some quick fix measures at debt reduction are designed as damage-control measures which try to get around the problem without eliminating it.
Ideally, you should not be looking to these quick fix measures because they only end up adding to your troubles. Of all the methods for getting rid of debt, debt reduction is the tried and tested way to go.
Of course, if you are much too deep in debt and bankruptcy is imminent, the last ditch effort to pay back your dues is through an aggressive form of debt reduction called debt settlement. What happens here is that you hire a debt settlement agency to negotiate with your creditors to reduce the amount of debt that you currently owe them.
In the meantime, you are obliged to save enough money for a bulk settlement payment. If the settlement is approved, you will receive a notice from the creditor that the debt has been settled or paid. After this, it will be left to your creditor to notify the credit bureau that you have managed to clear all the dues that you owed. Settlement is particularly appealing for creditors during times of tough financial situations for the debtor, when he is near to the point of filing bankruptcy; in which case the creditor is faced with the possibility of losing more money by getting only a trifle portion of the original.
Debt settlements are only applicable to unsecured debts such as those concerning credit cards and medical dues. Also, remember that this is an emergency measure. After this, a number of after-effects could arise and you would have to be prepared for them. This would include things like a damaged credit rating, an increase in collection calls, the possibility of lawsuits, tax obligations, and that all-too-familiar necessity of coming to a terms with your creditors.
If your situation is not as dire as the one previously mentioned, then you can get out of debt easily enough. All you need is determination, patience, and a willingness to try out the most recent of debt reduction methods: debt-snowballing or debt repayment. This mode of debt reduction tends to be especially useful when the aim is reducing debt pertaining to credit cards and the like.
In order to get your debt out of your way, first make a list of all your dues in ascending order from the smallest balance to the largest (notice that the order is not based on interest rate, but on the due amount). If it so happens that some of the debts are of a similar value, place the ones with higher rates of interest above the others. Thereafter, make an effort to pay off the minimum that you need to on all your debts.
If surplus funds are left, add this to the dues on the smallest debt, and keep focusing on completing your dues on the smallest debt until it is paid off completely. As soon as the smallest debt is off the list, do the same steps for the next ranked spot, this time adding the previous minimum payment for the cleared debt onto the funds allocated for the next.
If you adhere to this mode of debt reduction long enough, you could become debt-free in no time at all.
On a debt reduction plan, get a debt consolidation loan. We will get you a debt loan consolidation.
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