Understanding Your Debt Options

Debt options While the American economy continues to recover from the recession of the late 2000s, there are still many individuals and families struggling with overwhelming debt. It is important to understand one’s options in dealing with such debt. Here are a few of those options:

Consolidating Debt

Depending upon your circumstances, you may be able to improve your own situation by consolidating your debt into a single, much lower overall debt payment. If you have several credit cards, a car payment, and other revolving debt, you can combine that debt into one new loan. That new loan can drastically reduce what you pay out each month. For example, you may be paying out $1,000 per month on your various credits cards. Combining them into one new loan, your new payment might be $500, which cuts your payments in half. For those with bad credit, there is also a consolidation option that involves a car title loan. Embassy Loans of Florida has helped thousands of customers in need of a loan take advantage of their vehicle’s value and consolidate and pay off debt.


At some point, you may have to consider bankruptcy to help take care of your debt. There are several different types of bankruptcies but, for the most part, individuals will file either a Chapter 7 or Chapter 13 bankruptcy. The Chapter 7, or straight bankruptcy, is the most common filed in the U.S. In most Chapter 7 cases, individuals are able to keep all of their property. Some of an individual’s property may be sold off to pay down some of the debt. In a Chapter 7 case, unsecured debts, such as credit card debts and medical debts, are erased.

Not everyone can file a Chapter 7 bankruptcy. If a person has a sufficient amount of income as determined by the courts, that person must file a Chapter 13 bankruptcy. A Chapter 13 case is essentially a repayment plan. Persons filing are subject to certain debt limits as well. A Chapter 13 bankruptcy proposes a new payment plan to creditors. The minimum payments are determined by the court based upon the filer’s income. Typically, individuals have three to five years to pay off the debt.

Bankruptcy can help eliminate many kinds of debts, but it does not work on all debts. Tax debts, for example, cannot be wiped out in a bankruptcy. Depending upon an individual’s situation, consider consolidating as much debt as possible into new lower payments in an effort to pay off debt and pay it off faster.