Getting into debt these days has become very easy
We'll work with you to assess your debt and help you plan and implement a strategy to bring it back to a manageable level. There are several strategies for getting out of debt, and while all of them have their own merits, they have their drawbacks as well. Which one is right for you? We won’t know until we have a chance to study your particular debt.
Budgeting and Decrease Spending
The most effective way to combat debt is to lower spending and increase debt payments. Often, the simplest solution is the hardest to swallow. Creating a written budget helps prioritize spending, and budgeting, in turn, improves how money is spent. It is usually easier to lower discretionary spending than it is to increase income. Debts and the payments which come with them increase your risk. With a high debt load, even temporary interruptions to income can be stressful and can exacerbate the situation.
Borrowing money from friends or relatives
I f you have a friend or relative who has enough money to help you get out of debt, think long and hard – and then think again – before choosing this option. While borrowing from a friend or relative can help you avoid the high cost of interest (if they are willing to give you the money without asking you to pay interest), borrowing money can hurt, even ruin, your relationship.
Credit counseling
For many people, credit counseling is a good option. After all, in most cases you can lower your interest rate, lower your monthly payment, and combine your credit card bills into a single payment. Be careful. There are lots of “non-profit credit counseling” companies out there. Not all are created equal (and not all do what they say they will do). Before signing any paperwork, it is a good idea to ask numerous of questions. Compare the fees and other program details. Just because a business is non-profit, doesn’t mean there aren’t costs to you – and it doesn’t mean you don’t need to shop around and compare programs!
Debt consolidation loan
If you are fortunate enough to own a home (and you have enough equity to borrow money from your home’s value), a debt consolidation loan may be the way to go. In many cases, your interest may be tax deductible. Also think carefully about this option – because if you borrow “against” your home, and you cannot make the payments for whatever reason, you may risk losing your home! Fees, interest rates, and terms vary, so make sure to shop around for the best loan program for you!
If bankruptcy seems like the only option, then debt settlement (also called debt negotiation) may be a good. If you are behind in your payments, this can be a less drastic step than declaring bankruptcy. You will pay income taxes on the amount you save, but this amount is usually still much less than the amount you would have paid in interest. Before deciding on debt settlement, make sure you feel comfortable with such an aggressive strategy – and once again, shop around and compare terms and fees.
Bankruptcy
Bankruptcy should be the last alternative. With the new bankruptcy laws passed in October 2005, it became much more difficult to have your debts “written off” through bankruptcy So, if this is you only option it is important to find a good lawyer, and discuss your options carefully.
This firm is not a CPA firm.
Financial Life Advisors (FLA), a Registered Investment Adviser, and Jim Oliver & Associates, P.C. (JOA) are under common ownership and control. Team Oliver is used to describe collaborative services of both firms. Professional tax services are provided by JOA and investment advisory services are provided by FLA, each under separate agreements.
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