Debt becomes hard to get out of because it restricts your monetary resources significantly. So if you want to survive your debts, you may want to find a way to lower your monthly contributions. That way you have more money to spend on other things in your life.
But how can you do this? Surely your creditors will not allow you to dictate how much you will send towards your debts without imposing some sort of penalty. The good news is, you have debt relief options that will make this possible and minimize or eliminate the penalty charges associated with it. All types of program will allow this to happen but you need to consider what you have to sacrifice for it.
Debt consolidation is probably the best debt relief option that will allow you to lower your monthly payments without ruining your credit score. There are three different ways to accomplish this.
First of all, you have debt management. This type of consolidation involves a debt counselor. They will help you come up with a debt management plan that basically stretches your payment over a more extended term. This is what makes your lower monthly contribution possible. They will show this plan to the creditor and if they approve, you can send a single payment to the counselor and they will be in charge of distributing it to the rest of your debt accounts. They will also negotiate for a lower interest rate which will lower your monthly payment even more.
The second option is debt consolidation loans. In this method, there is no professional involved but the same consolidation and longer payment term takes effect. Unlike the previous, a low interest rate is easier to guarantee. What you will do is apply for a loan that is enough to pay off your debts – at least the accounts that can be paid in advance. Some type of debts will penalize prepayment transactions. The key is to make sure your loan has a low interest – which can be done if you have a high credit score or a collateral. Loan payment terms are usually 3-5 years long and that can help lower your monthly payments too.
Another option is balance transfer. This means getting a new card that has a zero interest promo. The consumer will transfer the amount so that the high interest balance will be transferred to one that will not impose interest – at least during the promo period. This usually lasts from 6 months to a year. That means any payment that you will make during this time will only go to the principal debt.
There is also the option to get out of debt using debt settlement and bankruptcy. Both can also allow you to make lower monthly payments. Debt settlement actually aims for an overall debt reduction. The idea is to negotiate with the creditor so you are allowed to pay only a percentage of your debt and have the rest of it forgiven. Bankruptcy involves a court system that will decide if your debts should be discharged or not. If your financial conditions are qualified, you could end up not paying anything towards your creditors. Of course, that comes with a price and it is your credit score. If you don’t mind lowering your credit score, then these two could be an option for you.