Being in debt is a common situation. People live paycheck to paycheck, purchase items with a credit card, and live above their means with no savings as a buffer. The mortgage, the car, student loans, the latest version of a smartphone, dining out, and indulging children all add up quickly. Most people are in serious debt before they realize it. One late credit card payment last month, a missed student loan payment this month, and a partial payment on the electric bill does not seem so bad until interest rates rise, late fees are added, and telephone calls begin. The cycle repeats itself and people get deeper into debt. Before that happens, get information regarding ways to get out of debt now. Waiting until bankruptcy is an option will cause a lot of stress, cost a lot of money, and may even result in the threat of foreclosure.
Speaking with creditors is a start. It may be possible to set up a payment plan that is manageable, get late fees waived, and keep the electricity connected. Most creditors are willing to work with people because they want their money and they want to continue providing essential services. There are some creditors who are not willing to negotiate terms with individuals. In that case, a debt consolidation company can help. Creditors will often deal with professionals instead of customers. Company representatives may be able to lower payments, get late fees removed, and even arrange for a lower balance. The consumer will make one payment to the consolidation company, and the company will disperse the funds according to the debt management plan.
A debt consolidation or home equity loan can also be used to get out of debt. The bank, credit union, or private lender approves the loan to cover outstanding debts. The individual will then only have one monthly payment to make to the lender. Depending on the situation, a co-signer or collateral may be required for approval. Getting out of debt is only the first step toward successful financial management. Spending habits and management skills have to improve to avoid being in debt over and over again. Once paid off, cut credit cards up and keep only one for emergencies. Open a savings account and deposit a specific amount every pay day. It does not have to be a substantial amount, it just has to be consistent to establish that habit.