Pay Off Debts
Everyone would like to pay off debts, but there's a right way and a wrong way to do it
. American consumers are overwhelmed in debt. With the consumer debt at over $2 trillion, many are anxious to put all debt behind them. But, they should approach it sensibly too.
It is difficult to do that today. Most people have less equity in their homes than ever before, and balances on credit cards are staggeringly big. Bankruptcies are more and more common even though the long term effects are devastating, and the government is even making it a harder option to even use.
Even so, there are good ways and bad ways to pay off debts. Many feel like they should pay off their mortgages to feel more financial ease, but in order to do so, they often ignore unsecured debt. That can be a huge mistake. Late fees and penalties can rack up quickly, and when added up on the course of a year, the accounting just doesn't work. There's no reason to speed up payments on long term, low interest loan, and especially when it is at the expense of higher interest loans.
Before emptying retirement funds or take out home equity loans in order to pay off unsecured debt, check with debt resolution companies for solutions. When a consumer gets hit with unexpected situations like divorce, major medical illness, accidents or job loss, there may be better ways to pay off debt and not ruin credit ratings for years. Both debt management and debt resolution are options, and neither will effect hard assets like a home or other property.
If a consumer listens to an attorney, they may recommend bankruptcy, but that's what they are in business to do. Credit counselors may recommend paying off debts, but that's what they are business to do. Debt resolution companies work differently, and that's to renegotiate existing principles into lower amounts. It will take less emotional trauma than bankruptcy, and takes less time. The normal period is for twelve to thirty six months for most consumers.
To pay off debts is to achieve financial freedom, but it is wise to consider what the real cost may be. Some debts such as mortgages or longer term loans are best left to the terms that were originally set up. It's knowing which debts to tackle first, and that's the real key.
by: Vicki Hall
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