Five Different Ways to Get out of Debt (Part 1 & 2) explained three ways one can use to get out of debt. In this part of the article, we discuss the remaining two ways to get out of debt, which are as follows:
- Do it yourself
Bankruptcy and how it Works
Many people are familiar with this one of the five different ways to get out of debt. It is viewed as being the most drastic, which is true, as when it is compared to the rest of the ways to get out of debt, it is. However, there is no reason to why one should get embarrassed or scared, especially in the case, other ways to get out of debt have failed. This one of the ways to get out of debt is the simple solution if you do not think others will work so much for you, which is why you may want to consider it after reading its procedure.
Two Types of Bankruptcies
Yes, there are two types of bankruptcies for those who are considering this method. These are:
- Chapter 7 bankruptcy
- Chapter 13 bankruptcy
Chapter 7 Bankruptcy
This is the most common form and may also be referred to as liquidation bankruptcy. The reality behind this method is the individual gets to keep all those assets that are covered by the exemption law in the state they are in. Depending on the state you are in, different laws exempt different assets, which is why you need to know what the law in your state allows. In addition, people who file for this type of bankruptcy also get to keep their entire property. The assets that are unprotected will be discharged by the bankruptcy trustee, to pay back your creditors.
Chapter 13 Bankruptcy
This type of bankruptcy may also be referred to as reorganization bankruptcy. With this, a repayment proposal is filed, which outlines how you will be paying off a couple of your debts over a 3-5 year period. This type of bankruptcy can help individuals save their home and car, as they are given up to five years to catch up on paying towards debts.
The Bottom Line
Obviously, with this one of the five ways to get out of debt, you credit score will be hurt. However, if you think about the long-term end with debt, then this may not seem like so much of a major issue. If you select this method to get out of debt, then you will have a chance to rebuild your credit as well as borrow money in the future. It is important that you research all your options and think about all the ways to get out of debt first.
Do It Yourself (DIY) Debt Reduction
This is the final ways to get out of debt and is self-explanatory. However, you may be thinking, is it even possible to get out of debt yourself? Well, yes, it certainly is and the surprising thing is there are many individuals who are doing it frequently.
Steps to Take
- Reduce interest rates
- Ask about hardship programs
- Fix your budget
- Make use of online tools
Firstly, you should give your credit company a call and ask them to reduce interest rates. Secondly, you may want to enquire about hardship programs. Doing this does not hurt your credit score and may result in cutting or eliminating any available credit you have with the organization.
Thirdly, you need to fix your budget and track down everywhere your money goes. This will help you cut down on the things that may not be so necessary. Many tools online are brilliant to assist you with the DIY method. Not only will these motivate you, but also assist you in every step you take.
The Bottom Line
Getting out of debt on your own may not work for everyone, but will work for some. Some people may find this is one of the easiest ways to get out of debt, whereas others may prefer the other ways to get out of debt. Thankfully, there are many ways to get out of debt, which enables you to choose one that will work best for you and your situation.
Getting Out Of Debt
After having read the five ways to get out of debt, you will have an idea on different methods that may just help with your situation. If you find it difficult to manage your money, then it is important you get in touch with certain groups that can help you with this. This is a small step, which will really benefit you in the long-term and may even allow you to stay debt-free forever. Regardless of which way you choose for yourself, you will find many sources and success stories out there, which will keep you motivated throughout the whole process.