Bankruptcy can be a result of overspending or bad planning, but sometimes, it’s no one’s fault. Bankruptcy is not the end of the world. The past few decades have seen a dramatic rise in the number of people who are unable to pay off their debts. You can survive it and come out on the other side more financially solid.
In our website, you can get more information on how to reduce your debt, by leading the few simple steps to get back into the active lifestyle, free of any debts. Here are some of the tips for reducing the debt:
Put an end to creating more debts: This won’t get you out of debt, but at least your debt won’t get worse. When you continue adding debt while you’re paying it off, you won’t make much progress, if you make any progress at all. Reduce your temptation to create more debt by cutting up your credit cards.
Sell items for cash: Put together a list of items that you could sell. Summing up some extra cash by selling items you no longer need or are ready to part with — and using the proceeds to pay down debt — can help you rapidly lighten your debt load.
Try for settlement: Debt settlement may be the solution if your accounts are past due or you owe more money than you could repay over a few years. When you settle your debts, you ask the creditor to accept a one-time, lump-sum payment to satisfy the debt.
Cash out retirement funds or insurance policies: You may consider pulling money from your retirement account to pay off your debt. Beware; if you’re not eligible for that, you’ll face early withdrawal penalties and additional tax liability if you withdraw money from certain retirement plans. You may have accumulated some cash in your whole or universal life insurance policy that you can put toward your debt. Be careful though, some withdrawals have tax consequences.
Making a good credit score: Basically, your credit history is important because lenders, insurers, employers, and others may use it to assess how you manage financial responsibilities. So we’re telling you that if you have a negative credit history, you could be without insurance or utilities, unemployed and can be even homeless. The credit score gives the first impression to the lender about the borrower’s creditworthiness. Therefore, the first step in the loan approval process is checking the credit score of the borrower. When you give your loan application to the lender, it first checks your credit score and if satisfied with credit score, then only it proceeds for further processing of your application.
In our website, we’ve mentioned a few tips to save one’s self-form getting into debt.