Should You Use Your Property for Debt Relief?

Consumer debt is at an all-time high in the US reaching $3.855 trillion representing a 3.4% increase. Credit card payments, rents, personal and student loans are just some of the expenses that form part of this figure. If you are struggling with your debts, there are ways to go around them. From creating household budgets to eliminating frivolous expenses, these cost-cutting methods can help manage debts. However, if the interest rates are very high and it is difficult to keep up with large payments, you may need to go for drastic actions to pay debts. Debt relief or management is something that you might need to consider. Using a property to settle debts might also be an option.

What You Should Know About Debt Settlement

In situations where you cannot repay your debt at all, you might have to go to a reputable debt relief company if you have exhausted your options such as going to a (non-profit) consumer credit counseling service. The agency will typically negotiate on your behalf with your creditors to pay a smaller amount than what you originally owed. This involves paying a one-time lump sum to your creditor through the debt relief company. The advantage of debt settlement is that the creditor is willing to accept a lower amount of the original loan you took. In addition, the lender cannot sue you for the debt nor can collectors bother you with payments. Going down this road involves some risks for it might take a long time before all your debts are settled. In the meantime, you might even discover that you owe back taxes on any loan or debt that you have. Plus, it should not be forgotten that you need to pay back a debt relief agency for their services which is a percentage of settled or eliminated debt. Your credit score will also take a hit so you need to consider this solution very carefully.

Personal Property in Debt Relief

For homeowners who are 62 years and above, home equity financing or a reverse mortgage may be used to supplement income and help pay debts. If you have property and used a mortgage to secure financing for it, this is a separate type of loan. You cannot use your property to pay off unsecured debt. Lenders cannot take away your property if you cannot pay your unsecured debts. However, mortgage and financial companies can sequester your home if you fail your obligations. If unable to pay your mortgage, you can opt for refinancing, loan modification or selling the house. If the market value of your property is bigger than your mortgage, you can opt for this solution and maybe have something left over to pay the unsecured debt.  However, you won’t have a roof over your head so you need think of the consequences as well of selling including a short sale.

There is no clear-cut answer as to what is the best option to repay debts. Your property can, perhaps, help pay for unsecured debts in cases where its value exceeds the loan. In extreme situations, declaration of bankruptcy may be the last resort. Talk to a financial adviser who can help you find an acceptable solution to your debts without compromising your property.

Chrissy Helders

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In Debt? Why You Should Never Rely On One Income

America is in the midst of a national debt problem. The country owes millions and 1 in 5 American citizens have more credit card debt than emergency savings, according to personal finance company, Bankrate. Therefore, the last thing the population wants to hear is that Trump’srenegotiation of the North American Free Trade Agreement could result in 300,000 job losses in the country. So, with consumer debt at an all time high and hundreds of thousands of US jobs at risk, now’s the time to build a secondary income.

Utilize your skills

It’s so easy to become complacent when you have a regular salary from your employer. However, should an life-changing illness or a redundancy occur, you’re stuck with rising debt and no pay packet to rely on. Every individual has skills they can utilize to bring in a secondary income. These skills may be the result of expert training and qualifications gained in your current employment or picked up over the years doing day to day tasks. Either way, take the time to sit down and list your talents to determine how best to use them. If you’ve got great design expertise and are keen to sell some of your arts and crafts to supplement your income, then building an eCommerce website via an efficient WordPress hosting service is a perfect task to complete in your spare time.

Monetize your hobbies

Hobbies can be an excellent money maker. For individuals who are established bloggers, signing up and advertising affiliate services is a simple way of making a passive income to help pay off your debts. Photographers who take innovative and compelling images are highly sought after and can make a decent secondary income by offering their services at special occasions. Alternatively,simply selling your photos to clients to use on their own websites and business marketing material is a great way to bring some additional money home.

Making the most of your secondary income

When you’ve decided which avenue you’re going to take to secure a secondary income, it’s essential that you are sensible with how it’s used. Don’t be tempted to blow the extra cash on luxuries such as a holiday or a posh meal out. Every penny you make should go towards clearing your debt. You may decide to make a repayment once a month to clear the debt, or, alternatively, you could put the money in a high interest savings account for a period of time and once you’ve accumulated the interest, pay your debt off in one lump sum.

Debt isn’t an easy thing to live with, so, by securing a secondary income you’re ensuring you’ve always got a way to pay it off and need never worry should your main income source suddenly come to a halt.

Chrissy Helders

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On the Road To Financial Health – Creating A Household Budget

Financial health, and being in debt, is socially embarrassing, but how many Americans realize they are not alone? Eight in ten Americans are in debt, reports CNBC in a 2015 report. Many Americans remain in debt until death, and the average household is actually over $100,000 in debt. If there is a better argument for household debt management, it has yet to be reported. Luckily, household debt is manageable with time, diligence, and a solid plan in place. Necessities and luxuries for home or business are still possible to obtain with some strict discipline on the household finances.

Face the music directly

Getting a handle on the finances means facing them head-on, similar to how any business solution is managed. This is the scariest step in the process because the numbers might be staggering. However, it is necessary to gather all debts to be weighed against all possible avenues of income. This is similar to reviewing the bottom line of a successful business. Enlist the help of a financial advisor,who may be free of charge through the credit unions for members. List financial goals, such as having a specific amount of debt paid off within a year, then create a budget for that goal. Learn to live without some luxuries, such as dining out or other recreation, to meet financial goals. Just as a business needs the books balanced, so too does a home.

Look for cuts

Look for cuts in every part of the budget to help put more money into the debt. Look for reasonably priced homeowner’s insurance rates, re-figure cable bill costs, and look for cuts in the utility bill. Consider how a business chooses what to sell, and how to make a profit. A successful business would never purchase a product, then sell it for less than cost. This is similar to making home purchases on credit or paying for services that aren’t being used. Research every item that takes away from the income with a magnifying glass. Call each company to find out how to reduce payments or cut services. Contribute the extra cash to debt.

Don’t be shy

Talk to companies that hold household debts. Many of them will help a household with smaller payments during financial difficulties for accounts that are in good standing. Choose a debt that will be paid down first, then pay the minimum on all other debts. Use the extra cash toward the chosen debt.Do this until all debts are paid off. This method will help ensure there is enough income for everyday expenses while the debt is whittled away. Calling debt holders and asking about payment options provides a timeline for debt repayments. It is important to stay caught up on every bill, however, as companies are more likely to work with a person who has an account in good standing.

Paying off debt is socially responsible, and with eight in ten Americans doing the same, almost no one is alone in the effort. Figure a budget and stay devoted to the cause. Before long, the debt will be gone.

Chrissy Helders

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Consolidation makes big student-loan balances manageable

Americans are increasingly finding it harder to become and remain debt free. In many households, credit cards have replaced savings for emergency expenses. Auto loan delinquencies are at historic highs. In many urban areas, renting a basic apartment can wreak havoc on the most carefully balanced budget. But no group has been hit worse by America’s high debt levels than student loan borrowers.

As of the start of 2018, student loan debt topped $1.4 trillion amongst 44 million professional student borrowers. As such large portions of their incomes must go toward servicing student-loan debt, borrowers often have little savings to live on or continue their education. This results in increased credit-card balances and higher borrowing levels for vehicles and other big-ticket items. Also, many of the jobs students went to school for are located in urban areas where the cost of living seems a fortune compared to just a decade ago.

Now more than ever, student loan borrowers are looking for ways to manage and cut their student-loan debt. By far, consolidation stands as the most effective method. Consolidation allows students to have just one monthly payment, often lowers interest rates, and provides longer loan terms. However, whether consolidation works depends on the type of student loan and when the borrower applies for consolidation.

Federal student loan consolidation

Federal student-loan consolidation offers many benefits, even if the interest rate remains the same, as Debt.org explains, consolidated federal loans provide a lower rate in some cases and offer the benefit of stretching payments over longer terms, a tremendous help in reducing monthly payments for cash-strapped career starters. It also allows borrowers to drop co-signers from their loans. Further, consolidation locks in a low fixed rate, protecting the borrower from market fluctuations.

Professional Students also qualify regardless of age or credit status. Borrowers can consolidate even if they are behind on payments or have suffered some other financial hardship. A number of income-based repayment options allow borrowers to pay based on what they can afford, a necessity for any student-loan borrower not making the income they hoped.

Private student loan consolidation

Private loans are a very different animal when it comes to consolidation. Credit scores matter. Student borrowers who have fallen on hard financial times face barriers in qualifying; however, those who qualify are often offered variable interest rates that are much more attractive than the fixed rates of federal consolidation.

Avoid the interest-rate trap

Stretching the term and signing up for income-based repayment helps borrowers who cannot fit larger payments into their budgets but often results in more interest payments over time. Interest that the borrower does not pay is recapitalized into the loan, meaning that interest is charged on interest. Also, longer terms mean a much larger portion of payments goes to interest. This can add up to tens of thousands in additional interest over a long term on a high balance.

Borrowers should always carefully consider the level of interest they accrue. If full repayment is possible in a shorter time, borrowers have the option of saving on interest by paying off their consolidated loans early.

Chrissy Helders

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