Up to Your Eyeballs in Debt?

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Most Americans have so much debt that they consider selling their organs to pay it off. To live the good life anymore, you need to make a lot of money. That is not possible for everyone in the economy we live in now. The system is built for people to incur debt on a regular basis. This has become a serious problem, especially in the last 20 years. There are thousands of companies willing to give anyone a credit card. People are not making enough to live a normal lifestyle, yet companies have little to no standards when considering someone for a loan. So, debt incurs and defaults happen. Luckily, there are ways to manage debt effectively, lower interest rates, and get out of debt quickly. You probably have TV commercials running through your head right now. In all seriousness, debt is an important matter. You have a family to feed and support, so debt needs to go away ASAP. Remember the extension to the federal law, Debt Forgiveness Act, which gave homeowners, short-sellers, and others relief from foreclosures and other debt during the financial crisis on Wall Street? There are federal and state rules and regulations that you may turn to in such crises.

Do You Want Your Debt to Go Away?

There is such a thing as good debt. I know what you are thinking, and no, this is not an advertisement. It affects your credit score. When you have revolving credit, your payments are on time, and you have the right percentage of credit in that line, then your score increases. This tells borrowers that you have credit history and responsible with it. Your credit score is very much like loaning a friend $100. If that friend promises to pay you on a certain date, you expect it to be in your hand then, or else they have defaulted on the loan. You start to bug them about it. Send them texts and call them to remind them of their debt obligation. After all that happens, even if they finally pay you, you will likely never loan them money again. They have exhausted their trust with you. Your credit score is that simple. No, you do not want all your debt to go away, but leave a small enough amount to manage it properly.

How Do You Achieve Debt Forgiveness?

If your debt is completely out of control and there is nothing left to do but submit to the borrowers, then you should ask for debt forgiveness. Back to the analogy, the jerk friend, who never payed you back that $100. They have a good reason, and they ask that you forget the debt. It is a little different with financial institutions though. They are protected against these situations, and they must abide by federal and state laws regarding bankruptcy. You can get creditors to forgive debt a few ways. Filing for bankruptcy is the most common option. There are plenty of lawyers who are willing to handle your case. Of course, they take a large pile of money that you do not really have from you, but at least it gives you a fresh start. There are different levels of bankruptcy, depending on where you live. So, talking to a lawyer is the best thing to do. If you have certain reasons for defaulting on a loan, you may be able to talk to the creditors and work out some sort of deal with them. If you got a loan for a car, or other item, they will want it back. But at least you do not have that debt anymore. The best way to minimize the risk is to borrow responsibly. Just because you want that new motorcycle that goes 250 mph, does not mean you take on so much debt that you starve yourself. It just is not worth it.

Pros/Cons of Debt Forgiveness

There are situations where you must make a choice when it comes to debt relief. When filing bankruptcy, you will have that on your credit report for several years. This tells creditors that you made some mistakes. But you have a clean slate, and you are starting over. However, most loan companies do not even consider someone with a previous bankruptcy. If you can manage your debt in just a few years, this option may not be for you. There are hundreds of debt consolidation companies that you may turn to for help. Most of these companies take on your debt and just make you pay monthly until you pay it off. Some of these companies charge you a boatload of interest though. Beware, you may pay as much as twice your original debt in the end. If you default on a loan and ask for forgiveness on an item, they will want that item back, and they may tack on some fees. That means the 250-mph bike must go back to the dealer so someone else can go through the same process you did. It is a vicious cycle. If you have debt that is hurting you or your family, consider talking to a bankruptcy lawyer. A good one will give you advice on what you should do. They will tell you if your debt is manageable or not. They will also have contacts that they may refer you to, so you can get the help that you need. How much are you in debt?