Ways to Get Out of Debt

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  • 8/13/2019 Ways to Get Out of Debt

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    Ways to Get Out of DebtDebt is a result of spending more than what can be afforded. Many people get into debts due to a carelessspending habit and unplanned use of money. A life without debt is stress-less and once you are into it, hellbreaks loose. There is no easy way to get out of debt without paying back the money. Read on to knowmore about ways to get out of debts.

    A life filled with debt is a life filled with stress and this sign of danger has a serious toll on thehealth. Debt is the means of using purchasing power before earning the payment. This is aboutspending the future earning today and paying them in the future. While spending the money, mostpeople don t e!en think of the ways to get out of debt.

    The Cycle of Debt

    The word debt originates from the old "rench word #dette #and $atin #debere# which means toowe, from #de habere# meaning to ha!e, re-ntroduced in the %&th century. A debt is granted withan e'pected repayment plus interest with or without security. A debt cycle begins when a creditoragrees to lend a sum to a debtor, in return of an interest on the debt.

    The cycle of bank debt begins with an agreement between the debtor and the creditor (bank orindi!idual creditor), regarding the standard of the debt repayment. The payment is designated asthe total sum of money that includes the principal with the agreed interest, either in cash orgoods. The repayment is made in installments, with the increments included, o!er a period oftime. *t can also be paid in lump-sum amount. +redit card companies and debt corporations ha!esuccessfully used debt as a lending power for their business.

    10 Ways to Get Out of Debt

    These are some of the ways to get out of debt by using and planning the finances carefully. Thereis no direct way of getting out of debts without paying or bankruptcy filing .

    %. Use the assets to clear the debts *f the assets owned has significant e uity, then theycan be used to clear a part or whole of the bad debts. The debt can be controlled byusing a part of the asset to clear a part of the debt and bringing it to a manageable le!el.+onsiderable amount of money can be sa!ed if the high interest credit card debt iscon!erted to a lower cost one.

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    . Second job The money from a second /ob can be used to clear some of the businessdebt . A list of the debt with the interest rate can be made and those with higher rates canbe paid off first.

    0. Zero credit cards The best way to cut debt is to immediately destroy all the cards andretain one card for emergency use.

    1. Repay ent plan The e'penses should be cut and the sa!ed money must be used to

    pay those debts with high interest first.2. Credit consolidation loan A credit consolidation loan can be used to pay off all thedebts and ha!e a new smaller loan with a lower interest.

    3. Debt counselor A debt counselor can assist in the control of the spiraling debt. Thecounselor can impro!e the credit rating as credit bureaus will be aware of a credit plan atwork. The payments will be organi4ed and the lower payment le!el will be decreased todefault in payment. +ounselors can also help in formulating a plan which will ensure thatthe credit will be cleared within a stipulated period.

    &. Credit card debt consolidation A consolidated payment plan can be set up with thecreditors to enable a good credit rating. *t is similar to a credit consolidation loan e'ceptmoney is not borrowed to pay off the creditors.

    5. !u p su pay ent to the creditors *f a relati!e or someone is ready to help inclearing the debt, the creditor can be approached to pay off a percentage of the loan andthe remainder written off. 6ome creditors will be willing to accept this offer rather thanha!e a bankruptcy.

    7. "an#ruptcy under chapter 1$ *f the credit accumulated comes under the pro!isions inchapter %0 bankruptcy, then the pro!ision can get a relief from a part of the credit.

    10. "an#ruptcy under chapter % The time for a new start has come as there is no optionother than a full bankruptcy .

    The ways to get out of debts are ne!er easy but the !olume can be reduced or lighten with a littleplanning. 6till, fight on and hope to get a good credit standing and start a new line of credit. Allthe best8

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