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Getting into debt is a process that catches people by surprise. Charging repair bills, vacations, food, and leisure items occur over time. And then one day the debt reaches critical mass levels. Accessing further credit becomes impossible because no credit — or very little credit — is available.

Carrying a heavy debt load is a bad idea for a number of reasons. Credit scores are harmed. The combination of low cash flow with limited borrowing options might create great difficulties. Debt burdens are never helpful. Clear steps do need to be taken to eliminate debt. Good news exists here. Several ways exist to achieve desired debt relief.

Struggling with the Status Quo

Attempting to make the minimum monthly payments on credit card debt is not going to fix the problem when a massive amount of debt is owed. Paying a little extra one month, paying the minimum for two months, and then borrowing a bit on a card won’t solve anything. A deliberate plan needs to be taken in order to fix things. Certain approaches to debt relief are better than others. Each individual borrower has to look at his or her own situation and go in the appropriate direction.

Debt Consolidation Borrowing

Debt consolidation loans may be the most painless way to deal with heavy debt loans. A new loan pays off all the old loans. More specifically, a better loan is used to eliminate high-interest credit card debt. Transferring debt to a zero-interest introductory offer on a new credit card is a common way to do this. Taking out a very low interest line of credit via a home equity loan is another.

As long as someone is able to procure credit, this remains an option. Being strict with paying down the debt and avoiding new borrowing enhances the success potential of the process. An applicant for a debt consolidation loan does need to present a certain level of credit worthiness. Not everyone makes a good candidate for an unsecured loan. Secured loans may be impossible due to a lack of collateral. All is not hopeless though. Other strategies exist.

Debt Management Methods

Debt management is a form of counseling. A debt manager looks at the current fiscal situation a client is in and advises on how to cut down on debt. The counselor may suggest cutting out a host of unnecessary expenses. The money saved from the cost cutting could be directed towards paying down fiscal obligations. Concrete actions are left to the person being counseled. No one is going to force anyone to take good advice.

Debt Settlement Offers

Debt settlement is usually done when bankruptcy is looming. Essentially, the troubled borrower is unable to make any additional payments the way the debt is structured. A settlement offer of, say, 40% of the remaining balance is put forth. The settlement, if accepted, might even be paid in a series of structured payments. The lender opts to go with debt settlement to avoid the debt being discharged in bankruptcy. Lenders, however, are not going to accept settlement offers unless it is clearly and totally in their best interest to do so.

Advertisements from debt settlement companies make the process sound easy, but there are complexities that shouldn’t be overlooked. The forgiven debt is taxable. A 1099 is filed with the IRS by the lender. Also, debt settlements go against a credit score and linger for seven years.

Filing for Bankruptcy

When debts are massive and assets are extremely low, filing for chapter 7 or chapter 11 bankruptcy might be the only strategy available. Unsecured debt ends up discharged — eliminated — and secured debt can be restructured. Chapter 7 follows a liquidation approach. Chapter 11 employs reorganization.

Entering into bankruptcy should only be done in the most severe of situations. The process takes place in a courtroom. The process is also long, serious, and involved. Furthermore, bankruptcy remains on a credit score for 10 years.

The Borrower’s Path

Heavy debt brings with it enormously heavy burdens. Steps to get out of debt are varied. A borrower has to look at his or her situation very carefully. Doing so allows for picking the right path to fix the situation.