If you’re feeling overwhelmed by the amount of money you owe, this could be a very helpful article. You have more options than you might think, so let’s go over some basic strategies that will help erase your debt.

When It’s Too Much 

Generally speaking, it’s time to consider debt management or settlement when you don’t think you’ll be able to pay your debt within five years. That’s a good benchmark to start thinking about. 

Whether it’s credit cards, medical bills, or personal loans, it’s important to have a manageable amount you’re able to pay off each month. But if the total amount of unpaid debt is equal to or exceeds your total income, you’ll want to get serious about planning a strategy. 

Bankruptcy 

It’s a good idea to get in touch with a bankruptcy attorney before you agree to a debt settlement or management plan. Consultations are usually free, and even if you don’t qualify you’ll have other options to explore. 

Chapter 7 liquidation is a popular form of bankruptcy, which can erase most credit card debt, medical debt, and personal loans. However, there are a few things to keep in mind if you go this route. 

Any child support, student loan debt, or taxes owed will probably not be forgiven through Chapter 7 liquidation. Your credit score can be severely impacted as well, staying on your credit report for up to 10 years. 

Debt Management

If credit card debt is your main problem, consider a debt management plan. You’ll usually be able to make monthly payments at reduced interest rates or have fees waived. You would be making monthly payments to a credit counseling agency, which has agreements in place with debt management clients. The National Foundation for Credit Counseling is a great resource to view officially accredited agencies. 

What To Avoid

Financial burdens can cause us to make bad decisions sometimes. It’s important to avoid choices that can bury you even deeper into debt. Let’s go over common mistakes people with alot of debt often make. 

Don’t borrow against your home equity, which puts you at risk of home foreclosure. Don’t pay a secured debt late in order to pay an unsecured one, such as a credit or medical bill. You could lose the collateral that secures your debt. 

Stay Cool

The best way to deal with unmanageable debt is to think clearly and logically. Don’t let emotions cloud your judgment. Instead, find out what options are available and choose the one that fits your situation best.