Debt Relief Basics

An old Arabic saying says that debts can weigh more than a mountain, and anyone who has ever experienced mounting bills, credit card and mortgage payments can feel the weight of this truth. Unfortunately, not all of us get into trouble because we have been living beyond our means; there are those of us who have led a model life, saved for a rainy day yet the economic doldrums have pushed them into a tough spot. So are we doomed, or is there respite in sight? There is, you can make debt relief a reality with a little bit of careful planning, disciplined living and curtailed spending. Let's see how:

People who are up to their necks in bills are looking for fast relief, debts may have been piling up for the past couple of weeks or years, you can still get quick debt relief, either way. The first step is to get your credit report. You can get one free credit report each year if you haven't asked for one yet. Use the credit report to make a list with the details of all your debts without ignoring even the tiniest amount.

Then you need to consider counseling options for consumers; there are many non profit and for profit organizations that are will to give credit counseling services and can assist you get immediate debt relief. Prepare your debt list when you meet the counselor, so that he can carefully evaluate your alternatives.

With a credit counselor on your side, you will end up paying substantially less than what you actually owe because he/ she will try to negotiate the lowest payments for you. You'll be able to afford the monthly payments. The counseling service will forward the money to your creditors on a monthly or weekly basis, after you have given them the money.

Comparing the interest rates on your retirement account with your outgoing is advisable because if your outgoing is significantly more, then you are actually losing more than you are making out of the interest from your retirement account. If this is the case, it's a good idea to cash in a portion of your retirement fund; however, you need to realize that any profit on these funds will be subject to capital gains tax.

Cheaper than a debt consolidation loan, would be taking a second mortgage on your house and it's also a good way to pay off your loans in full. However, making low monthly payments on your second mortgage is necessary, but the advantage with this option is that your debts will instantly be removed.

If you have a boss who is sympathetic, try to approach him for an advance that can be used to pay the small amounts. But, you will also have be ready to live without the amount you advanced for awhile.

By now you see that there are many alternatives for debt relief but it is important that you are willing to do what it takes to be debt free.