Being in debt is a dreadful feeling. You work hard all week and the money is out of the bank before it even has a chance to gather a speck of dust.
The only way to see the “light at the end of the tunnel” is to find a way to get your debt under control.
There are a few avenues to go down, but only you can decide which is best for your particular circumstance.
Manage Your Own Debt
If you have the discipline, you may be able to get out of this mess on your own. You are going to have to sit down with all of your bills, both credit and household, and figure out exactly how much you need to get through each month. More than likely, you are going to need to cut out a lot of unneeded expenses, such as your weekly night out or ordering so much takeout.
When you have your budget in line, you will need to organize all of your debt payments. One method of payment that is sometimes recommended is to pay off your credit cards with the lowest balance first (prioritize in order of highest interest). As each card is paid off, fold that payment into the next card.
As you tick off each credit card, the balances will come down quicker and the same amount of money is becoming more and more effective.
Debt Management or Debt Consolidation?
If you are unable to manage your debt on your own, two of the options available are debt management and debt consolidation. If you still have decent credit, a debt consolidation loan may enable you to reduce your payments down to one and reduce your interest rates.
The monthly payment might also be lower than what you are currently paying.
The second option is a debt management plan. This is one step ahead of bankruptcy and might be less damaging to your credit record. It will still be damaged, but necessarily not for as long and as badly as a bankruptcy will hurt it (depending upon circumstances).
This also shares the benefit of having a single monthly payment to make managing your money easier.
What About Bankruptcy?
In some cases, bankruptcy is the only option. If this is your chosen route, it is probably best to immediately get qualified debt advice. They can guide you in the best manner to proceed and may be able to help alleviate the pressure being put on you by creditors. At the very least, it can alleviate the stress you are feeling from that situation.
Bankruptcy will usually be on your credit report for six years. Once the bankruptcy and all debt associated with it is removed from your credit report, you’ll be well positioned to steadily improve your credit rating again over time.