this girl is overspending

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Debt. It surrounds you, it presses down on you like an actual physical object. Sometimes you actually have trouble breathing because of it. You want the nightmare to end. You want to wake up and feel good about yourself once again. You want that immovable mountain of debt to somehow, magically, be gone.  All you want is to get your life back! Is there some way – any way! – that you can get debt relief?

Fortunately the answer is a resounding “YES!” Yes, you can get out from under your debts and it may not be as painful as you think.

Structuring Your Debt Relief

Debt relief can come in many forms. Hopefully one of them will be right for you. Debt relief could involve debt consolidation, which simply means taking out a new loan that pays off all of your current loans, making certain that the interest rate on the new loan is lower than the average interest you were paying on all of your smaller loans. Many people do this by taking out a home equity loan. While taking out a low-interest home equity loan to pay off high- interest credit cards can save you hundreds or even thousands of dollars a year and allow you to pay down your debts that much faster, there is a potential problem. You are substituting a personal unsecured loan (credit cards) for a secured loan. If you fail to make payments on your new loan you could be putting your home at risk.

Another type of debt relief involves restructuring your loan, sometimes called debt settlement. Debt settlement involves negotiating with your lenders to reduce how much you owe them and/or reduce your interest rate and so make your monthly payments something you can once again afford. Many people are uncomfortable negotiating with their credit card companies themselves. They don’t know how much of a reduction to ask for (often 50% or more), and they don’t know the proper language to use when negotiating. For this reason many debtors choose to hire a debt settlement company to do their negotiating for them. A debt settlement company is not free, but the money they save you is generally several times their fee.

If all else fails bankruptcy may be an option for you. If you choose bankruptcy you will be forced to undergo debt counseling with a debt counselor looking for another alternative. If your debt counselor agrees that bankruptcy is your only out, then you have two basic options: a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

Under a Chapter 7 bankruptcy any assets you have may be seized by your creditors and sold and any remaining debt is simply wiped clean, providing you with a fresh financial start. A Chapter 13 bankruptcy forces your creditors to restructure your loans, allowing you to make smaller payments for 3 to 5 years, until you can get back on your financial feet. A bankruptcy stays on your credit record for 10 years and can make getting future loans more expensive or even impossible and can even affect your ability to get certain jobs.

So What Type of Debt Relief is Right For You?

Start by taking a good, hard, unemotional  look at your financial situation.  Do you still have an income? If your debts were restructured could you continue paying them off?  If so, then a debt consolidation loan or a debt settlement arrangement with your creditors or (failing that) filing Chapter 13 bankruptcy may be your best alternatives. If you have no income and no reasonable hope of reestablishing an income in the foreseeable future then your options may narrow down to a Chapter 7 bankruptcy.

But whatever you do, make a decision and let your creditors know what you’ve decided. Simply letting matters go on and “hoping for a miracle” is not a mature or healthy way to run your financial affairs.

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