We all know what it’s like to receive dreaded red letters from creditors. Across the top of the page, in big bold lettering, you are being ordered to pay huge amounts you simply can’t afford.

What are your options when this happens? Pay it all off in the specified time, and sacrifice your other bills? Or file for bankruptcy, and deal with the complications and stigma that come with it?

It can feel scary, lonely, and intimidating to be faced with debts. But what if I were to tell you that you have more options than you think?

The five major options include: debt reduction, debt consolidation, credit counseling, debt settlement, and bankruptcy. Let’s take a look at the fine print before you make any decisions.

My Debt Is Too Large! Can I Reduce The Amount?

The answer is yes. This is definitely an option worth exploring.

After falling behind on bills, you may find it impossible to catch up. Have you ever found you pay off one credit card debt using another credit card? It’s an endless cycle and can be handled through a reduction and/or settlement.

Debt settlements mean your creditor (if they are feeling generous) can reduce the final debt as long as you agree to pay it in one chunk or by a set time period. Sound good? This is a particularly likely option if you’re saddled with medical bills, as many hospitals will be somewhat sympathetic and understand you’re experiencing hardship.

No matter what, you can’t know your options until you ask the questions. Call them and have a conversation!

What Is Debt Consolidation?

Debt consolidation is the process of one larger loan taken out to pay off all debts. This means everything is in one place, and you only have one monthly repayment.

Be careful, though. This can be risky. Make sure you don’t end up with higher repayments than if you were to pay your creditors individually. You need to be smart about debt consolidation, so it works in your favor. If you’ve completely wrecked your credit score by ignoring bills, you may find it difficult to obtain a consolidation loan.

Pay Bit By Bit

There’s another option if the other two don’t sound appealing or likely. You can simply choose one debt that is manageable, and focus on getting it paid first. Make sure this is an essential debt, if applicable. If you have one credit card bill and one utility bill, both in arrears, pay off the electric first. This is a priority. Then, once it’s paid, begin to tackle the next one. This only works if you have some funds. If, for example, you recently lost your job and have no income, this won’t be a good option.

Can I Hire Someone To Help?

Don’t fret. You’re not completely alone. It can be embarrassing to talk about debt with family and friends. Credit counseling services are professional agencies that perform debt settlement for you. They will take the details of your debt, and set up arrangements with whomever is owed money. Be warned, you’ll need to pay a fee for this service. Nothing is free these days!

What’s The Deal with Bankruptcy?

It’s a bit of a dirty word, isn’t it? And it never looks great on a credit file. However, sometimes it’s the only way to freedom. I mean, what’s worse? Being chased for debts for the rest of your life, or accepting you have no money to give them and taking out a bankruptcy application?

This would allow you to become debt free and start over. It’s up to you to decide if it’s worth it.

There are solutions available

Do you feel hopeless? Are you deliberately avoiding opening letters and answering your front door? That’s no way to live! The first step to tackling your debt is knowing your options and asking for help. Why not give us a call? One of our specialist advisors is waiting to help.

Have you had experience with any of these options? Please share your experience and advice below. We’d love to hear from you.