5 Methods Toward Reducing Your Debt

Decreasing your debt is paramount to having a good credit rating as well as giving you peace of mind. You want to get out of debt, but not all debt reduction options may be beneficial. Let's take a look at five debt reduction options which may help you in your quest to get out of debt.

1. Consolidate Loans. Before declaring bankruptcy, consider pulling together all of your outstanding loans into one low monthly payment. Loan consolidators can help you come up with a plan to pay off all of your debt while maintaining your credit standing. Bankruptcy, unfortunately, ruins your credit rating while a consolidation loan may help you save it.

2. Your Life Insurance Policy. Your life insurance policy may have a cash value to it. Consider taking the cash from the policy and using it to pay off or lower your debt. Of course, your payout will be much lower upon your death; make sure your loved ones are adequately provided for when you have released this mortal coil.

3. Federal Loans. Government loan programs - local, state, and federal - may be available to you and at a rate much lower than what you currently pay your creditors. Check out loan programs, which you must pay back; as well as grants, which are gifts to you to see what your eligibility is.

4. Borrow From Your 401(k). If your company has contributory retirement plans such as a 401(k) or 403(b), you can take out a low interest rate loan and use the proceeds to pay off what you owe. You are borrowing from your retirement account so your loan must be paid back; if you do not pay it back you will incur IRS taxes and penalties. Still, the borrowing rates are quite reasonable.

5. Bankruptcy. The U.S. constitution gives Americans the right to discharge debt, and it is one option some must take in order to get creditors off of their backs. With medical expenses surging, gas prices hitting record high levels, and many other expenses increasing, bankruptcy may be your only choice to help protect your assets from overreaching creditors..

Obviously, some of these options have different consequences than others - like a ruined credit standing - still, when your back is to the wall your choices are extremely limited. Find your comfort level and choose an option that is right for you.

Matt Keegan is The Article Writer; you can view his work at http://www.thearticlewriter.com

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Debt Relief Information:

Related Articles

How to Negotiate Debt Settlement
People over extend themselves financially as a result of a change in their lifestyle. In today's economy were company mergers, and such; creates a displacement and hardship to the major of the workforce.
Use A Debt Checklist To Examine Where You Are
A Debt Checklist allows you to look at items and areas of your financial life. You need toexamine these to gauge how you stand.
5 Ways to Get Out of Debt
It has been said that everyday more and more people in the world are getting into unsecured debt. Once reason for this is the relative ease in which credit card companies and banks are extending credit to their customers.
Should You Invest In Savings Or Payoff Your Debts?
I have faced this financial question 8 years ago and recently I have friends asked me this same question. I think I should write it up so that it may help some of you that having the same situation.
Utah, the Nation's Bankruptcy Capital
Congress recently passed the Bankruptcy Abuse Prevention and Consumer Protection Act, designed to minimize frivolous bankruptcy filings and to require debtors to repay some of their debt. Once it takes effect in October, 2005, the law will make it harder for those with problem debt to have their debt wiped away by the courts.
How to Protect Yourself: Debt Collections
So you are getting collection calls? You're desk is full of unpaid bills. You dread answering the phone.
Learn How to Get out of Debt
Debt is becoming number one problem in the United States Today. The average American family has at least $8,000 in credit card debt and most college students who just graduate from college have $3,000 to $5,000 credit card debt in their first year after college.
The Human Side - Debt Stress
In all the technical discussion you hear about credit card debt, the best ways to manage it and pay it off and all the rest, one thing goes largely ignored. Credit card debt is extremely stressful, and can have a very negative effect on your life, if you let it.
The Effects of Consumer Debt
Consumer borrowing in the UK has now crashed through the £1 trillion barrier. 80% of this is due to credit card borrowing, loans and mortgages.
Solutions to Single Mothers in Debt
As a single mother, lets admit it, times get tough. You are fortunate enough to have your children that mean the world to you, but it doesn't come cheap.
How to Deal with Bill Collectors
So you've screwed up. You're drowning in debt.
Debt Help and Advice for the UK
At some time or another during our lives most of us will overspend and get into debt. Sometimes we can get our finances back on an even keel by cutting down on a few luxuries.
Bankruptcy Reform
There are some new bankruptcy laws going into effect before long and many think they are much needed. Of course, that depends on which side of the bankruptcy you are a part of.
Debt Consolidation Versus Debt Negotiation
Debt consolidation versus debt negotiation are two options that are available to you if you need debt assistance. When your monthly bills become too much for you to handle, it makes sense to use debt consolidation or debt negotiation for solving debt and credit problems.
Learn The 15 Debt Elimination Steps You Must Take Immediately!
What Everybody Needs To Know..
Two Ways To Debt Relief
There are many debt relief programs out there both off line and online. Sometimes it can be difficult to chose one from the other.
Is Filing for Bankruptcy an Option for You?
Bankruptcy laws give debtors a way to resolve debt by dividing their assets among their various creditors and in some cases will allow debtors to be freed of outstanding debts that cannot be paid, even after the division of assets. For individuals who find themselves unable to pay their debts, bankruptcy can be a viable option.
The ONE Law You Should Be Breaking
There is a law all smart people break.Parkinson's law.
Should You Join a CCCS - Consumer Credit Counseling Service for Debt Relief and Financial Freedom?
Do You Need to Join a CCCS - Consumer Credit Counseling Service?Are you in a "debt hell"? If you are unsure, ask yourself these questions:Do you have bill collectors calling you and home and at work, leaving annoying messages?Are you afraid to open the door in the morning because you are afraid that the Sheriff's office has left a court goody for you?When the phone rings, do you get butterflies in your stomach?If you answer the phone and it's a bill collector, when they ask for you, do you reply "He/She's not in right now", or even just pick up the phone and then hang it up without saying who is on the other end?Do you go for days on end without checking the mail because there are only bills there?When you finally do get the mail, do you just throw it in some random location for weeks or even months without ever opening it?Are you paying one credit card company's bill with another credit card?Are your credit cards riddled with over the credit limit and late fees?Do you only receive high interest credit card offers?Have you applied for credit cards or car loans and been told that you had been denied because of bad credit?Does your credit report show a lot of late payments, charge-offs, bad debt, 30 60 90 or 120 days late entries listed?Does filing bankruptcy seem like your only way out?If you related to at least two of those items, chances are you would benefit from a consumer credit counseling service.Believe me, I know what you are going through.
How Do You Spell Debt Relief?
Of all the problems possible in a marriage, finances cause the most marital discord. Many singles consider finances to be their most worrisome issue.