My Debt Relief Plan

Personal Debts - Getting Out of the Debt Trap

Do you live a lifestyle where charging basic necessities like groceries is unavoidable? If you do, things need to change! Being caught in the debt trap can be quite stressful and can even wreck havoc on your physical health and well being. Yet, you don’t really have to spend your days worrying about how you are going to pay that mountain of personal debts that you have accumulated over the months. If you want to get out the debt trap, you need to sacrifice some of the things in life and invest in the future. To help you get out the debt trap, here are some pointers for you.

Get rid of some of your cards

If you have accumulated a mountain of personal debts in your credit cards, do not add more to it. Unless it is an emergency, do not use your credit cards. Don’t believe those people that you cannot live without your credit cards. People in the past did not have credit cards and they lived longer and had lesser stress. If most of your credit cards are already near their credit limits, look for a company that will allow you to consolidate your credit card debts for a lesser interest rate and longer payment periods. Once the balance of your credit cards have been consolidated to one account, cancel some of your credit cards. Its better for you to live with two or three credits cards than having more than five of those plastic things.

Live frugally

If you have been drinking coffee that cost you 2, you will need to give up that coffee. Start brewing your own office instead of buying those expensive cups of coffee from Starbucks. Fine, your brew coffee will definitely not taste as delicious as those expensive brews but if you really want to get out of the debt trap, you just have to make few sacrifices. If you really expensive coffee, you can treat yourself to a couple of cups per week and nothing more.

Aside from brewing your own coffee, it would be best to start bringing your own lunch to work and cook your own dinner instead of eating out. According to studies, you can save as much as 100 a month if you bring your lunch and you can save as much as 200 if you take your time to cook your own dinner. Now, if you do not know how to cook, this is the right time for you to start learning. Cooking can be a lot of fun and before you know it, you will have so much fun in the kitchen that you would not really want to go out and eat as much as you used to.

If you combine all your savings from your coffee, lunch and dinner, you can already a considerable amount of money saved. You can use your savings to start paying off your debts. If you continue to live frugally, in no time, you will be relatively debt free.

James Copper is a writer for http://www.any-loans.co.uk where you can find info on personal debts

Add comment January 3rd, 2008

Debt Situation Assessment

You basically have a few options for dealing with your debts and I suggest you spend some time reading this article before taking any form of action. Your options are as follows:

1. Do Nothing. The best option for some people in debt is to take no action at all. If you live from paycheck to paycheck with little income and property, and look forward to a similar life in the future with no hope in sight, you may be what is called “judgment proof”. This means if anyone sues you and obtains a court judgment, they will not be able to collect because you don’t have anything they can legally take. You can not be thrown in jail for not paying up. If you do not predict having a steady income or property a creditor could grab, then sit back because there is nothing they can do. Most will simply write off your debt and treat it as a deductible business loss.
2. Find Money To Take Care Of Your Debt. Try selling a major asset, cut your expenses, withdraw or borrow from a tax-deferred account( this should be as a last resort), obtain a home equity loan or credit line, if you are elderly use the equity in your home (reverse mortgage), borrow from family or friends and options to avoid ( finance companies, tax refund loans, payday loans, pawn shops and debt consolidation companies).
3. Negotiate with creditors. You can negotiate to get your creditors to agree to accept less than you owe as a complete settlement of your debts. However, beware of the IRS if you you settle a debt. You could end up paying taxes on the difference of amount owed and amount paid to settle debt.
4. Get Help. Credit counselling.
5. File for chapter 7 Bankruptcy. It allows you to wipe out most consumer debts- credit cards, medical bills etc. However, you might have to surrender some property of value. Bankruptcy puts into effect “automatic stay”. At the end of the process, most of your debts are discharged by the court. You no longer legally owe the debts. If you incur debts after filing, you are still obligated to pay them.
6. File Chapter 13. This allows you to keep your property and use your disposable income to pay all or a portion of your debts over three to five years. You can use wages, benefits, investment income, business earnings or any other income to make payments.

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Add comment January 3rd, 2008