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Debt seems to be something with which almost everyone struggles at some point in their lives. There are a variety of reasons why people go into debt, and one of the first steps people need to consider is why they find themselves in this difficult position. After all, if they do not know why, they may also be unable to keep it from happening again.
Reasons People Go Into Debt
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Reduction of Income
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Divorce
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Mismanagement of Personal Funds
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Gambling
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Unexpected Medical Expenses
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Minimal Savings
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College Loans
While this may not be a comprehensive list, this covers some of the main reasons people will often find themselves owing more money than they can pay back. In situations like this, many people will attempt to figure out their next steps on their own (which may lead to filing for bankruptcy prematurely), but this is the time that people should consider reaching out to the professionals for help and advice.
In today’s global economy, there are many more options for debt consolidation and repayment plans than ever before. Bankruptcy should be viewed as a last resort, and thankfully there are real solutions to keep individuals from taking that drastic, final step.
Second City Advisers Debt Solutions
When bringing in the professionals, ensure that you have all the facts at your disposal, including every potential solution to your financial crisis. It is imperative that you investigate and understand every potential solution, including the benefits and drawbacks of each.
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Debt Consolidation: Your outstanding debt is combined into one fixed, monthly payment due to your consolidation company, thus reducing your interest payments, thereby reducing your overall debt.
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Debt Settlement: Your outstanding debt is gathered into one lump sum that has been negotiated by your settlement company, thus reducing your overall debt and interest. One fixed, monthly payment is due to this company, and your creditors are satisfied.
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Debt Management: You are assigned a credit counselor who will analyze your financial situation and prepare a budget for you that will ensure more money is paid to your bills each month, thus helping you get out of debt sooner than you would have on your own.
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Self-Repayment Plan: You do the work to place yourself on a budget in order to pay off your debts. No professional help is required for this one, but if you do not do the research and/or adhere to your budget, this plan will not work.
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Bankruptcy: This is a last resort solution that will hurt your credit report immensely. In short, while it forgives much of your debt, in the long run, this is not a solution that should be examined unless nothing else is a viable possibility.
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Ostrich Method: You take no steps to pay off your bills and hope that the debt just goes away. “Burying your head in the sand” is not an appropriate solution. It will ultimately hurt your credit and guarantee that your creditors hound you.
No matter what decision you ultimately make, the sooner you seek some kind of help for your debt issues, the better for you. Professional help may be the best solution for most, but regardless, act now rather than later for best results.
