Debt Recovery Solutions - Reduce Debt And Improve Your Credit
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While the average American household has acquired approximately
$8,000 in consumer debt, many people have achieved the dream of
living debt free. Reducing and eliminating your debt does not
happen overnight. However, if you outline a realistic plan for
reducing debt, you can become debt free in a few years.
Establish a Plan for Reducing Debt
Before achieving your goal, you must outline a detail plan for
eliminating debt. To begin, gather all your credit accounts and
unpaid bills. It is important to have an accurate debt amount.
Individuals who earn a huge salary may be able to eliminate
their debts by simply cutting expenses.
Record your monthly income and make a list of your monthly
expenses Determine how much income remains after your have paid
your bills for the month. This amount is your disposable income.
Instead of frivolously spending this income, use the extra money
to payoff your credit card balances.
If you do not have the extra income to payoff your debts, there
are other options available to you.
Apply for a Debt Consolidation Loan to Reduce Debts
Applying for a debt consolidation loan to reduce your debts is a
great way to eliminate high interest consumer debts. While a
debt consolidated loan will not immediately erase your debts,
these loans have short terms and low rates, which allow you to
payoff your personal debts in less time.
There are three ways to acquire funds to consolidate debts. For
starters, you can attempt to apply for a personal debt
consolidation loan. Depending on the financial institution, you
will need collateral or an excellent credit score.
Homeowners may apply for a home equity loan or line of credit.
The funds received from the loan or line of credit may be used
to payoff or reduce other high interest consumer debts. Be
careful when accepting these types of consolidation loans. Home
equity loans and lines of credit are protected by your home's
equity. With this said, the lender may foreclose your house if
you do not repay the loan.
Debt Management and Consumer Credit Counseling Services
Another method for reducing debt involves establishing a
relationship with a debt management or credit counseling
service. These services will help you reduce debt and improve
your credit rating by contacting your creditors and establishing
better terms and rates on your credit cards and loans.