If there is one thing that most American families have in common is that they owe a lot of debt. It is common for families in the country to owe a lot of debt. We as a nation, love to borrow money to buy things and then pay it back over time. There are problems with having debt and those who have a low income may dig a hole with it that they have trouble climbing out of. It is a good idea to know the options for help with debt for low income families.
The average American family owes over $100,000 on their mortgage and over $92,000 in consumer debt. Add to that the amount that many people owe in student loan debt and other types of debt and many people owe more than they feel they will ever be able to pay off. And they may be right, depending on the interest rates.
The problem with having all that debt is compounding interest. When you owe $92,000 in consumer debt, for example, the compounding interest that is added each month, may be nearly as much as you are paying toward the principal owed each month. For example, your credit card bill payment may be a minimum owed of $300 for the month, but due to compounding interest, there could be $200 per month added to the balance in interest. This creates a cycle that is extremely difficult for most people to ever get past.
Options for Debt Relief
If you are struggling to get your bills paid because you have too much debt, you do have some options you can consider. You will need to explore each one to see which will be the right decision for your situation. Not every option is idea for each person, it all depends on your situation and ability to pay back debt and get assistance.
 Bankruptcy – There are many people in America who file for bankruptcy each year. This is a legal process that will help you address the debt that you have. You will typically hire a lawyer who specializes in bankruptcy cases, and they will gather the necessary information and present it to the judge. The lawyer will show that you cannot afford to pay back the debt that you have. There are different types of bankruptcy, Chapter 7 and Chapter 13, which are the two most popular types for consumers. Those who are eligible for Chapter 7 bankruptcy will have much of their debt completely removed from their record.
Those who qualify for Chapter 13 bankruptcy will be able to make adjustments to their debt payments, so that it becomes more affordable to pay back over time. Work with an attorney to determine which one is going to be the best option for your situation and that you will likely be approved for by a judge. The pro of filing for bankruptcy is that you will get debit relief assistance, but the con is that it may impact your credit score negatively for years. To learn more about the bankruptcy process in America and different types of bankruptcy, click here.
Debt Consolidation – Many people who have a lot of different debt sources that they have to pay on each month will turn to debt consolidation for help with their debt management. When you owe a lot of debt there is a good chance that you have numerous sources you have to pay each month. It can become difficult to keep track of the different places you owe, so that you are able to make the payments on time. If you miss a due date you will usually be charged a fee, which then adds to your debt balance. Plus, multiple sources of debt will likely have a lot of different interest rates with it.
By consolidating the debt, you will end up getting one loan that will pay off all of your debt, and then you will only owe that one payment per month to cover the debt consolidation loan. This will help make it easier to manage, reduce interest rates, help you avoid late payment fees, and more. Many people find it easier to manage their debt if they decide to consolidate. Consolidation loans can usually be obtained through banks, credit unions, and through other specialized lenders. You can find lenders who provide debt consolidation loans locally, as well as online. You will need to apply for the loan to see if you are qualified and approved.
Additional Resources
When it comes down to it, there are not a lot of places and programs that will take your debt and pay it off for you. The options listed above are the best routes to take if you are trying to get out of the debt without paying for it, or you want to pay for it in a more manageable way.
If you are looking for immediate help paying for a payment on your debt, you may want to consider short term loan solutions, friends and family, and earning some extra money to make the payment. There are many side hustles that people can do to earn some extra money to get their debt payment made for the month. These include doing things like babysitting, dog walking, lawn mowing, etc. You could even pick up some curb alert items, clean them up, and sell them in the Facebook Marketplace.
One important thing to keep in mind while you are struggling to pay off of debt is to not create more. Often times, low income families who need help with debt and are struggling financially will end up taking on more debt. They make more debt as they try to deal with the loans and payments they already have. The first line of defense is to stop taking on more debt, and then to evaluate the best way to address and manage the outstanding debt you currently have. It is something you can do, but you will need to be disciplined to be successful.
