If you find yourself not making any progress on your debt, it’s time to investigate your debt relief options. Debt relief programs can change the terms or amount of your debt so you can get back on your feet more quickly. However, several factors come into play before using a debt relief program, including the types of loans you have, how much income you make, how much debt you have, and more.
When to Seek Debt Relief
If your financial situation is dire, you should consider debt relief as soon as possible. This isn’t to say you should wait until you’re in foreclosure or facing bankruptcy, but it is good to consider your options outside of filing for bankruptcy or foreclosure. If you do have to seek bankruptcy, you should seek debt relief beforehand.
Debt Relief Through Bankruptcy
You may not be aware, but you can seek personal bankruptcy to deal with your debt. However, filing for Chapter 7 or Chapter 13 bankruptcy is not always feasible. You must have the ability to maintain your living expenses, which may be difficult to do if you have too much debt.
Bankruptcy comes with a stigma, but there are benefits to using it to deal with your debts. For example, it can relieve you of a large chunk of your unsecured debt, including credit card debt and consumer loans. You’ll have to repay certain debts, like your student loans and tax debts.
If your situation is desperate enough and you’re already falling behind on your bills, bankruptcy may be a viable option. But, if you aren’t in an extreme financial situation, you should consider debt relief options before resorting to bankruptcy.
Debt Relief Through Debt Settlement
Debt settlement is another option that can help you get back to being able to pay your bills, but with fewer negative consequences.
One of the biggest issues with filing for bankruptcy is that it can negatively affect your credit score. However, if you’re able to reach a debt settlement agreement with your creditors, you may be able to get that debt reduced.
Debt settlement is an option when dealing with unsecured debt, such as credit card debt, medical debts, and even student loans. You can negotiate a settlement with your creditors to set your payments at a level you can afford, reducing your debt over time.
If you go this route, you’ll have to pay a debt settlement company to negotiate a settlement for you. They’ll work with your creditors and come up with a plan to reduce your debts.
When you cannot keep up with your bills, you shouldn’t be afraid to seek out debt relief. Several options can get you back on track with your finances, but each option has benefits and drawbacks.
Filing for bankruptcy can have a long-lasting effect on your credit, but debt settlement can gradually affect your credit score. If you don’t have any options left, it’s time to consider bankruptcy. But, if you have other options, it’s worth looking into debt relief before filing for bankruptcy.
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