Having debt hanging over your head is the worst feeling ever. It doesn’t only mess with your finances but also takes away your sleep at night. The only way to get yourself out of the jam is by getting a smart debt plan and following it until you’re all cleared up.
In this article today, I’m going to highlight some of the best debt plans for you, the ones that actually worked. If anything, they’ll help get rid of your debt. If not all at once, eventually you will. Let’s have a look at them in detail before you pick one for yourself:
Individual Voluntary Agreement
The individual voluntary agreement, commonly referred to as IVA, is a formal agreement between you and your creditor that buys you more time to repay your debt while crushing the deadline. It also restricts your creditor in communication.
Yes, once your creditor signs the individual voluntary agreement (IVA), he or she won’t be able to talk to you to make any more debt payments. It will put an end to pressurizing and aggressive debt collections.
If it’s the credit card debt that’s got you worried, you should think about applying for a balance transfer card. Balance transfer involves paying off debt for one of your cards using another card. If anything, it saves you from paying additional money in the name of interest fees.
As you know, credit cards come with a high-interest rate. It is one of the primary earning sources of banks and financial institutions and credit card debt is the worst of them all due to the interest rate.
The Debt Snowball
The debt snowball is another efficient debt plan. It works well for people who have multiple debts to repay. It involves paying off one debt at a time, starting from the smallest. When done with the smallest debt, you move on to the second smallest.
In this way, this method keeps you motivated. However, you need to have a significant amount of money coming in every month in order to follow the debt snowball. That’s right, guys. It is perhaps the only disadvantage of this debt plan.
Ranking fourth is debt consolidation. It is again a debt plan for those who don’t have money to repay their debt. In this method, you apply for a consolidation loan and pay off all your debt at once or in two episodes.
Also, you don’t have to worry about repaying your consolidation loan as it comes with a low-interest rate. However, you can only secure a consolidation loan if you have a good credit history. It’s one of the prerequisites of applying for a low-interest consolidation loan.
Last but not least, if nothing else works and you’re drowning in debt, declaring bankruptcy can give you a fresh start. It is beneficial for business owners as they’re liable to taxes as well.
For this, I suggest you check with a financial advisor beforehand as every state has different laws for bankruptcy. Also, it’s a legal, binding procedure; hence, it must be handled by a bankruptcy lawyer or an accountant.
And that’s all… There’s nothing more you can do about it. Settling the debt isn’t possible as nobody is going to forgive you for the money. Thus, it’s better to get a debt plan as quickly as possible and get yourself out of this jam. Here’s wishing you good luck!