Debt reduction is the quickest way to become free of debt
If you are in deep debt, don't give up and lose hope because there is a path to freedom. But in order for you to rid yourself of your unsecured debts once and for all you have to be in it for the long haul. No overnight debt management systems can totally free you from the the hell of credit card debt. Some quick fix solutions at debt relief are designed as damage-control measures which try to get around the situation without completely getting rid of it.
They can also become every increasingly complicated every time you try to quick fix a bad situation with another problem. Of all the methods for ridding yourself of credit card debt, debt reduction is the most successful at saving money and helping debtors become debt free.
Of course, if you are so far in debt and bankruptcy is right around the corner, the last ditch effort to pay back your dues is through a proactive technique of debt reduction called debt settlement. With this strategy, a debt settlement establishment attempts at a compromise with your creditors to settle your debt at an amount a lot less than what the current balance is.
While this is going on, you are going to set aside money for a one time payment to settle out the account. If the settlement is approved, you will receive a notice from the creditor that the debt has been settled paid in full. The collector will also at the same time notify the credit bureaus that the same dues you owed have been satisfactorily fulfilled. Settlement is particularly appealing for collectors during times of very hard financial circumstances for the debtor, when he is near brink of going through bankruptcy; in which circumstance the debt collector is faced with the very real possibiliry of losing more money by getting only a very small amount of the original balance.
Debt settlements are only eligible for unsecured debts such as those concerning credit cards and medical debts. Also, keep in mind that this is an last resort alternative to bankruptcy. So you should prepare yourself for the immediate consequences. Like a adverse credit rating, an increase in collection calls, the chance of being taken to court, tax obligations, and that all-too-familiar necessity of coming to a terms with your collectors.
If your predicament is not as unbearable as the one previously mentioned, then you can get out of debt easily enough. All you need is confidence, patience, and a desire to give a shot to the most recent of debt relief methods: snowballing your debt or debt repayment. This practical method of lowering debt is especially focused towards revolving credit situations such as those involved in credit cards.
In order to make your debt a thing of the past, first make a organized list of all your bills in ascending order from the account with the smallest amount owed to the largest (notice that the order is not based on the APR, but on the amount owed). If some dues come close in the amount owed, move the one with the higher interest at a higher spot on the list. Then force yourself to pay the monthly minimum payment on all bills.
If more money is left, add this to the dues on the smallest debt, and keep your focus on completing your dues on the smallest debt until it isa thing of the past. As soon as the smallest debt is removed from the list, repeat the same process for the next ranked spot, except this time around adding the previous minimum payment for the paid off debt onto the funds allocated for the next.
Keep doing this process and you will be flabbergasted at the speed at which you can free yourself of the credit treadmill.
Steve Martin is a debt analyst and research assistant with the US Consumer Advocate, which primarily solely in credit card debt relief.
Published December 6th, 2007
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