Consider debt relief first if you are thinking of filing for bankruptcy. If your debt is piling up and it is difficult for you to keep up, your creditors may be willing to sit down and talk about restructuring your debt rather than take the risk and lose everything.
One aspect of debt relief that you can apply for is to refinance your mortgage to get a lower interest rate. There’s a big chance that your creditor will sit down with you and help you with this to lessen the chances of you defaulting and posing a more significant credit risk.
You can also apply for debt consolidation. Debt consolidation is the process in which you combine all your high-interest loans and put them in one loan that will give you a lower interest rate. Pool all your balances from your other credit cards and consolidate them in a new credit card that will give you a significantly lower interest rate for a definite period of time. This kind of debt relief is usually what credit cards offer their clients.
HELOC or home equity lines of credit is another kind of debt consolidation. HELOC is when you borrow against your home’s current equity, and the collateral for this kind of loan is your house. Think of this as somewhat of a revolving fund – as you pay your balance, your credit is replenished.
Debt relief is a great option for the borrower to have another chance of repaying their debt. Sometimes, when the situation is right, the borrower can even ask for a reduction of the borrower’s principal loan to as much as 30-50%. But this will only happen if the creditor will see that if debt relief is not given, the borrower’s only recourse is to file for bankruptcy. The best next thing to do is to talk to a counselor or hire a professional to help you get out of your debts by debt settlement or debt relief.
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