Debt is becoming more and more of an issue and it is kind of crazy and scary, to think that nowadays if you do not have any debts, you actually would not be the majority. That is right, today, many people are carrying some form of debt and it does not look like things are going to change for the better anytime soon. In case you are reading this, you are most likely struggling with debt yourself. As we have already pointed out, you are definitely not alone in this. With all that being said, there are many ways to fight debt and to get rid of it. If that proves to be too much of a task, there are also ways for your debt to be forgiven.
What types of debt are there?
There are a number of different debt types as there are many different financial situations that people get into. The most common reason for people to go into debt is simply because of the difficulties they experience with paying their monthly bills. Life has become quite expensive, there is no doubt in that. So a lot of people are finding it extremely hard to deal even with their regular monthly expenses. Along with that, there are the unexpected emergency expenses that often leave people unable to react without taking out a loan. There are also other reasons that people end up in debt, like student loans and mortgages loans. Regardless of what type of debt you are carrying and the reasons behind it, one thing is for sure. Unless you find a way to get rid of that debt, the future will not look so bright.
Even though getting into debt may not have been entirely your fault, you will have to face the consequences of it nevertheless. In some circumstances, these consequences may not be that hard after all, because there are many ways that you can get out of debt and avoid debt forgiveness. You need to understand that declaring bankruptcy should be a last resort option. Before that, you better explore every other option that may be available to you and try to find a way to make it work. With that being said, debt forgiveness can be your only viable option.
Unlike with debt relief, where there are a number of options. With debt forgiveness, you get to choose between only two: debt settlement and bankruptcy. Both of these methods for debt forgiveness are able to reduce the total debt amount that you have to pay to your creditors. So let’s dive into debt forgiveness so that you can have a better understanding of what it is and how it works.
What is debt forgiveness and how does it work?
As the name itself suggests, with debt forgiveness you may be able to reduce the total amount of debt that you owe to all of your creditors. Regardless of whether it is with a debt settlement or with declaring bankruptcy, the creditors whom you owe money to may decide to eliminate or slash the balances on all of your debt.
With bankruptcy, usually, most of the unsecured debts are being completely forgiven. Within the process of bankruptcy, your secured loans like auto loans and mortgages, and therefore the lenders that have issued these loans normally take precedence over loans that are unsecured, such as business lenders and credit card issuers. When you file for bankruptcy, if there is a mortgage that you unable to afford, the lender who issued the mortgage will proceed with foreclosure on your property. Same goes in the cases where you have a car loan and you are no longer able to make your car loan payments – the loan lending company that you took the loan from will take your car. After your secured debts have all been dealt with, you can use the leftovers to pay what you owe to your unsecured creditors. If there are still any unsecured debts that you cannot afford to repay, these debts will probably be forgiven. That means that you will no longer be required to repay them. And so, even though in a lot of cases, declaring bankruptcy is not a great idea as it can really ruin what is left of your credit score, there are some circumstances where it can actually save you a lot of money.
Debt settlement, unlike other types of debt relief that can really burn your credit score down to the ground, it may actually improve your credit score by giving you a lasting and real debt forgiveness. A debt settlement organization can really help you reduce your overall debt amount and get most of it to be forgiven.
Another important thing that you should know about the forgiveness of credit card debt is that any amount of money that has been forgiven by the creditors that you owe money to which exceeds $600 will then count as taxable income.
Consulting a financial specialist
If you are really considering one of the options for debt forgiveness, it would be for the best if you consult a debt forgiveness financial specialist. Not only can such professional give you a more detailed explanation on what options are and how each of them can play out in the long run, a debt forgiveness specialist can also point you in the right direction and the right debt forgiveness companies which you can work with.
As we have already mentioned more than once, debt forgiveness should not be your first choice when battling debt. There are different things that you can do to repay your existing debts, as well as many different tools and services that you can use and take advantage of. Be sure to explore all your options before you make any final decision on whether to go through with debt forgiveness or not. Such alternatives include different debt relief programs, debt consolidation loans and debt management services. Among these, probably the one that is most used by people with multiple debts is the debt consolidation loans service. With a debt consolidation loan you may be able to get rid of all your current debts without having to go to extremes like bankruptcy.
Commit to your goals and be realistic about what you should expect
You need to understand that in order for a debt consolidation loan or other debt repayment method to work, you need to fully dedicate yourself to the goal of getting rid of all your debt and you also need to be realistic with your expectations. Paying off debt is not an easy thing to go and it takes a lot of time and effort. That does not mean that because it is hard, you should just give up and declare bankruptcy. Have the right mindset, the right mentality and fight until it is no longer possible.