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Emergency Debt Management Solutions

By Janet Lacey
Published: Thursday, December 3rd, 2009

When you find your debts getting out of hand, then it is time to understand that you need to take some drastic steps for debt management. Approaching a no obligation, free debt management counseling agency is a good idea since experts at these organizations will help you look at your debt status objectively and suggest debt control measures customized for your situation.

Some of the main debt control measures that you may consider in an emergency situation are:

Self Repayment: Self repayment of debts is when you yourself make a list of all your expenses and income and draw up a plan for paying off your outstanding debt yourself. You will have to negotiate with your creditors personally for waiving off late fees, interest payments or providing you with better repayment terms based upon your financial situation.

The best part about self repayment is that you do not face the risk of being defrauded by a fake debt management company, or pay a legitimate one money to do a job that you yourself can do. On the negative side, self repayment requires self discipline, planning and perseverance that is hard to come by.

Balance Transfer: If credit card debt forms the lion’s share of your outstanding bills, then you can benefit by using a balance transfer card. You can transfer all your outstanding payments to a balance transfer card that comes with 0% APR for the first 6 months. You can negotiate with your card companies for waiving off late fees or high interest rates after explaining your situation before transferring your balance.

Once you pay off all your different cards, you will be left with only one payment on your low interest balance transfer card. The negative aspect of using balance transfer cards is that if you are unable to pay off most of the balance drawn on your new card within the time that it has minimum APRs, then you will be left with a large amount of debt with increasing interest rates to pay off at the end.

Debt Consolidation Or Debt Settlement: Debt consolidation is a situation where a firm (a bank or a financial company offering debt consolidation services) will pay off all your debts. You on the other hand, will be left with a single low interest consolidated loan that you can repay over a long period of time. Debt consolidation can be of many different types. You can consolidate all your outstanding loans like your mortgage and car loan, or you can just consolidate your credit card loans.

While the benefit of debt consolidation is that you are left with an easy to manage single repayment every month, the disadvantage is that you end up paying much more than you originally owed because of long repayment periods.

In all the cases above, you can negotiate with your creditors for waiving off late fees, interest charges and even a part of the principal on the basis of the fact that you eventually want to pay off your debt. A good negotiator may be able to get up to 40%-50% of the total outstanding amount waived off. Consider these options before filing for bankruptcy which should only be used as the very last resort.

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