Debt Repayment Options

Falling into debt is not fun, especially if you want to take out a loan. Debt ruins your credit report, which makes banks shy away from you. Learning how to manage your finances is something easier said than done. Learning at a young age is best, but sometimes things happen out of ones control.  Being debt free is a goal we all have.

Here are some debt repayment options you should consider:

Pay It Yourself

Paying the debt involves assessing your financial situation and coming up with a good plan for repaying it. You might need to call your lenders and creditors to ask for lower interest rates or work out better payment schedules. You are in charge of sending monthly payments to your creditors every month, but how you repay it depends on you.

Debt repayment plans need to include your secured and unsecured loans. The best way to repay your debt is by starting with the high-interest ones first. However, if your high-interest loan has a high balance, start with the other loans to ensure you finish faster.

Consumer Credit Counseling

When you go to a credit-counseling agency, you will have to work with your current budget to come up with affordable monthly payments for your unsecured debts. You will be put on a debt management plan that will include lower rates of interest and lower minimum payments. This process of credit counseling will take between three and five years, this means you have to be patient.

While on this debt management plan, you will not be allowed to use credit cards. Although your credit report will show you are undergoing counseling, it will not hurt your credit score any further.

Debt Consolidation

This refers to the consolidation of all your debts into one monthly payment. In some debt consolidation programs, you will have to take out a loan to repay all your unsecured debts. This means you need to have a good credit score to take out another loan.

However, other programs work like credit counseling, in that they combine your monthly payments. Other common ways of consolidating your debts include merging credit cards debts with mortgages or taking out second mortgages. No matter what kind of loan consolidation method you use, the end goal is to combine your debts into a single payment.

Debt Settlement

If debt settlement is successful, it can help you lower your total debt by up to 60 percent. However, you will have to pay the debt settlement firm a monthly fee. The firm negotiates a lump sum, which is less than the total amount of debt you owe. Once a settlement amount is decided on, the firm will use the payments you have been sending to settle your debts.

However, there is no guarantee your creditors will accept the settlement offer. If the settlement is unsuccessful, you may or may not receive a refund, depending on your agreement. When looking to find debt relief with Debt Academy, for example, you should find out whether they offer refunds.


Filing for bankruptcy can help you get total relief from your debts. You need to go through credit counseling and pass a means test if you want to show you do not make enough money to repay your debts. Depending on the state you are in, you might be required by law to sell some of your assets to repay your debt.

Your unsecured debts might be discharged or wiped out when you declare bankruptcy. However, tax debts, student loans, and child support cannot be bankrupt.

When deciding on a good bankruptcy lawyer, make sure you go through California business names or whatever state you’re in, and make sure you get all the business information before deciding on a lawyer.


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