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Debt Settlement: 4 Different Ways to Settle Your Outstanding Debt

Written by Banks Editorial Team

Updated April 22, 2021​

2 min. read​

Follow these ways to settle debt to begin to pay off the money that may be controlling your life. Outstanding debt is nothing we want to take with us into the New Year. It’s something that controls our lives, from home purchases to student loans, preventing us from reaching our full potential. It can be overwhelming to manage and downright discouraging at times, leaving us to assume that debt settlement is a happy reality we won’t ever be able to enjoy. However, fear not. Debt settlement is definitely possible depending your unique situation, especially in 2018.

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Ways to Settle Debt

Here are 4 different ways to settle debt and pursue debt repair in the months to come:

1. The Old Fashioned Route

Yes, you can actually pay off your debt the old fashioned way today as one of the ways to settle your debt. This may seem obvious, but one way to eliminate credit card debt is to simply pay it off. One great avenue to do this through is a debt snowball. For example, pick the highest rate credit card, or one with a low balance, and pay it off first. Then move onto the next one, and keep it going. Your debt settlement will become more manageable, especially as you eradicate the accounts that were sitting with the highest interest rates of all.

2. Debt Consolidation

If you have numerous accounts racking up different interest rates each month, it can be hard for you to get ahold of the entire situation. You can settle your debt by consolidating it. If you transfer your debts into one account with one interest rate, you have successfully avoided hundreds in monthly fees as a result of the multiple accounts. However, this kind of debt settlement does come with some repercussions. Your utilization ratio will go up, thereby lowering your credit score. If you were planning any future purchases, you may want to reevaluate with this option.

3. Debt Settlement

As an alternative to bankruptcy, debt settlement is the approach of negotiating a settlement of the debt with each creditor, instead of filing bankruptcy. The amount settled for can often be much less than the balance owed or claimed to be owed. However, going down this route may require you to hire an attorney, as this can get tricky, quickly.

4. Bankruptcy

No, filing for bankruptcy isn’t the best thing in the world. However, Chapter 7 is a very popular way for individuals to discharge credit card debt. This classic bankruptcy route essentially wipes out debt completely, providing you with a light at the end of the tunnel. There’s also Chapter 13 bankruptcy, which is a reorganization of debt. This debt settlement will see debt paid off in a 3-5 year period, making it more manageable for you along the way.

Settling Debt in 2018

The New Year is a perfect time to start settling your outstanding debt. You’re going to have to face it sooner or later, making right now an ideal moment to make a budget, make a payment plan, and make a brighter financial future for yourself moving forward.

Make 2018 the year you settle that debt.

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