Solutions for Unsecured Debt Problems

You may currently be facing a situation where your credit card bills have gotten out of control. Perhaps you had some good interest rates at one time, but now the combination of high balances and high interest rates has put you in the position of only being able to make the minimum monthly payment on some of your accounts. This can make you wonder how you'll ever be able to pay off your bills completely.

The worry and stress this kind of situation can cause contributes to problems in your personal life and may even begin to affect your health (and your night's sleep). You need to find a solution for your debt problem, and you need to do it soon. Because debt problems tend to get worse with time, not better, unless you intervene and take the appropriate action.

No matter the size or severity of your debt problem, there are five basic debt relief solutions from which to choose. They are listed here in ascending order of the seriousness of the debt problem:

· Saving and reducing expenses – cut down or eliminate as many expenses as you can and use the extra money to pay down your debt faster

· Debt consolidation – refinance your home or use a HELOC to pay off your unsecured debt. But also consider the impact of exchanging unsecured for secured debt (putting your home at risk)

· Debt management (Credit counseling) – get interest rate relief and pay your balances in full. May have only minimal impact on the monthly debt payment

· Debt settlement (Debt negotiation) – significantly reduce balances (by 40% to 60%), monthly payments and the time required to pay off debts

· Bankruptcy – rightfully reserved only for the most desperate debt situations

Saving and reducing expenses are recommended for those who have realized early on that they need to do something before problems have a chance to start. Debt consolidation may be an answer for those with significant equity in their home, however think carefully before putting your home at possible risk. Debt management, which is also referred to as credit counseling, is a good solution for borrowers who can realistically pay off their balances in full if they can get some interest rate assistance. Debt settlement, which is sometimes referred to as debt negotiation, is a good solution for those who are over their heads in debt but are not desperate enough to declare bankruptcy. Bankruptcy should be considered a solution of last resort for only the most intractable and overwhelming problems requiring credit card debt relief.

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