4 Different Ways to Manage your Debt

There are many risks paired with debt consolidation, and being one of the four different methods to manage your debt, it’s important to know that there are other methods to help you during your journey with debt, other than settle for debt consolidation.

We’re pretty sure that when you received your first credit card, making payments were a breeze, and there nothing wrong with spending your credit because you knew you’d be able to pay it off. That is until you received more cards to spend on, or perhaps went a bit overboard with your spending habits on your credit card.

To maintain an excellent credit score and ensure your safety with making debt, it is recommended to only use up to 35% of credit on all your credit cards or retail accounts, but unfortunately people are inclined to spend the money they don’t have, especially if it’s made available to them in large quantities.

Determining how and why you over-spent on your credit cards, as well as the reason why you’re not able to afford it, is very important for not getting back into trouble with debt, especially after you’ve settled it the first time around.

Settling Your Debt and Finding a Suitable Method to Do So

  1. Debt Consolidation – As the most obvious way to settle your debt, debt consolidation offers you both secured and unsecured loans, with secured being the most common type. Since secured debt consolidation loans require collateral, you are putting your home, car, and liabilities at risk, which could be taken away from you in the event of you not being able to repay the loan.

When it comes to unsecured debt consolidation loans, it poses as a much safer option and doesn’t require collateral to obtain it. They are, however, more difficult to obtain.

  1. Debt Settlement – This option involves negotiating with your creditors, to obtain a reduced payback amount, as well as a lower monthly payment, which leaves creditors or credit card companies without the right to negotiate, as a debt counselor on your behalf does this.
  2. Debt Management Plan – This plan is created as a non-profit credit counseling plan, which helps individuals obtain debt management, especially in the cases of struggling to settle their debt. A financial counselor is usually assigned to an individual on a realistic budget, which also includes them negotiating lower fees, as well as payments with creditors.
  3. Bankruptcy – Considered to be the last resort, bankruptcy is only implemented when an individual cannot pay off their debt, whatsoever, which results in having to give up your assets to settle your debt. It also includes your retirement account.

Get debt counselling and debt review help from Credit Matters. Call us today! 086 111 6197