Many young adults just starting out in the job market often carry a large debt burden due to low salaries, student loan payments, and the temptation to finance desired goods through excessive credit card purchases. If you are in this position, there are steps you can take to pay down your debt and thereby secure a more profitable and stable future for yourself.
Start by asking yourself what expenditures you can cut back on. Examples of ways to be more fiscally prudent include: not taking a vacation away from home or doing so in a more bare-bones manner; cooking more and rarely eating out at restaurants; and cutting back on items such as TV's, furniture and new cars.
Paying off your debt in an aggressive and advantageous manner is the next step. Enrolling in automatic payment plans for your credit cards and loans will keep you on track for paying down your debt and prevent you from being tempted to use that money in other ways. Also, check into whether making automatic payments might earn you a slightly lower interest rate from your lenders.
If you have federal student loans, you may qualify for an income-based repayment plan that lowers monthly payments to no more than 15 percent of your discretionary income.
Calling your lender to determine what your options are can reduce credit card debt. While you should watch out for disreputable credit-counseling agencies, you might consider the services of a trustworthy one such as the National Foundation for Credit Counseling to help negotiate a lower interest rate on your behalf.
If your debt is too overwhelming to manage, one option is to make a settlement with your credit card company. Doing so allows you to erase your balance by making a lump-sum payment that is less than the total owed. It should be noted that a settlement would be reflected on your credit report for up to seven years.
If you are really in need, another option to consider is filing for bankruptcy. There are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy allows you to completely discharge your unsecured debts including credit cards. Chapter 13 is more of a debt reorganization plan, but you can still discharge credit card debt at the end of your repayment plan period. A bankruptcy filing will stay on your credit report for ten years. Filing for bankruptcy can be very complicated so it is wise to consult an attorney if you elect to do so.
Most importantly, do not bury your head in the sand and hope for the best. Take action now before you ruin your credit status and incur a lifetime of financial problems.
We hope you find the foregoing useful and that you choose to schedule a consultation today. Contact Info We have four offices: DAYTON (at the 75 South / 725 Interchange);WEST CHESTER (on Route 747 near the Union Center exit on Route 75); and Cincinnati (HYDE PARK and EASTGATE). We would be glad to meet with you at a convenient time, including evenings and weekends.