Paying off debt is not like getting into it. The repayment takes more time, effort, or extra money. And sometimes, it’s the combination of all three. This is why getting out of debt quickly and painlessly is like a dream for many debtors. They try all the techniques to get rid of the debt amount and live peacefully for the rest of their life.
We know it’s difficult but not impossible. The only thing is you should choose the right method to repay your debt. But, before that, you should get answers to the questions like how patient you are willing to be to pay off your debt, how much risk you are willing to take to do so, and if you understand the potential consequences of debt repayment options.
Based on the answers, you should choose one of the best repayment options from the following list.
- Paying It Yourself or As Agreed
Typically, it’s one of the cheapest options to repay your loan. You will do everything yourself based on the agreement signed between you and your lender. There will be no third-party involvement as you will sort out everything with your lender.
This option is highly effective unless penalty rates and late or over-limit fees are involved. With no extra charges, you will pay what you owe.
- Debt Management Program (DMP)
If your income is regular and interest rates are high, you should opt for a Debt Management Program through a non-profit credit counseling agency (CCA). The agency will help you pay off your debts with lower interest rates and better repayment terms. The agency has different ways to do so.
Some important things to know about the Debt Management Program is that the debt is paid off in 5 years or less and there are some reasonable fees involved. You shouldn’t worry about the fees as they get counterbalanced by the lower interest rates and elimination of late fees.
- Debt Consolidation
As one of the debt management strategies, debt consolidation combines multiple debts into a single monthly payment. It simplifies the payment schedule and provides lower interest rates than you are currently paying on your debts.
Repaying your debt with consolidation will not make the payment easier but keep you stress-free and reduce your amount as the interest rate will get lower. Also, you don’t have to keep the track of multiple loan statuses.
- Debt Settlement
When you settle your debt for less than what you currently owe with the promise that you will pay the settled amount in full, it is known as debt settlement. Sometimes, debt settlement is known as debt relief or debt settlement.
It’s a good option because the repayment amount is less and you get rid of the debt at once. Also, there is no legal involvement. Usually, the debt settlement is handled by a third-party company. But, if you want, you can do it yourself.
Of these options, Debt Management Program is the best followed by debt consolidation because both options reduce the interest rates. In the Debt Management Program, you get better debt repayment terms as well.
