Available Options When You’re Drowning in Debt

2007-05-02 10:04:19

( Financial )



If you can pay only the minimum balance due each month, or you start to miss out payments, or you use grace periods on a regular basis and a credit advance on your credit card to pay the other bills due on another credit card, then you are showing signs of drowning in debt. After having serious thoughts about it and you have concluded that you are indeed drowning in debt, you should look for options that may be available to you. These should include bankruptcy, credit negotiation, debt consolidation, and other debt repayment schemes.

Bankruptcy should relieve you from drowning in debt. Although bankruptcy erases most of your debts, child support and federal income taxes are not eliminated. Depending on the type of bankruptcy proceedings you file, some of your assets may be exempted from liquidation, or your creditor may agree to a lower amount than your debt, if you have a reliable income.

If you don't want to tarnish your credit report with a bankruptcy filing, you may try to negotiate with your creditor for reduced interest rates. Or, you can secure the help of companies engaged in debt consolidation for a nominal fee. But remember that in debt consolidation cases, you still get lower credit scores.

Another method that you may consider to stop drowning in debt is to use a budget to repay your debts. This may not be easy but it gives a positive impact on your credit score. Debt repayment scheme includes paying off debts with higher interest rates by determining your sources of cash inflow, like liquidating some of your personal assets. Discretionary cash outflows like entertainment, dining out, gifts and the like should be avoided in the meantime. If your cash inflow is still not sufficient, you may want to seek other means to increase cash inflows, or reduce more outflows.


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