Being in debt in your 20s can be a frustrating situation. The good news is that you can get out of it and live the rest of your life as a happy person with an awesome debt profile. The following are some tips for getting out of debt in your 20s and then staying out of it:
Step number one is to stop accumulating debt. You're never going to improve your situation if you keeping racking up debt. Therefore, you must commit yourself to cease all activities with your credit cards and credit accounts. You can recover if it's what you desire, but you have to have discipline. You should only use credit cards for emergencies, not regular household bills, and definitely not any frivolous purchases of any kind.
Debt consolidation may be something you want to consider doing. It can work for you if your credit score has not yet taken a huge plunge. You can apply for a debt consolidation loan that will cover all of your existing debts. Then you'll only have to pay one debtor every month. Debt consolidation can help you to get rid of some of the unnecessary interest that's currently lingering on your credit cards. It can also make your debt more organized and manageable. Think about doing it as it might help you immensely.
A debt management company can help you in a similar way to a consolidation company. The difference is that the debt management company is not going to lend you any cash. Instead, they are going to review your credit profile thoroughly. After they review your profile, they will calculate a monthly figure that would be reasonable for you to pay. You will pay your counselor instead of your scattered creditors. You'll also pay a fee to your counselor for the services he or she provides. You may be able to improve your credit profile in a few years using this method.
Bankruptcy is always an option that you can consider. You may want to contact a bankruptcy attorney to find out if you qualify first, however. The lawyer will check to see if you pass the means test. If so, you may qualify to file a Chapter 7 bankruptcy that will allow you to have your debts dismissed. The other type of bankruptcy you might qualify for is a Chapter 13. Chapter 13 will allow you to develop agreements with the creditors where you pay some of your debts back each month.
You can hire someone to negotiate with your lenders, as well. This person may be able to convince the lenders to perform debt settlements with you. In a debt settlement situation, a lender agrees to allow you to pay less than the balance you owe to cancel the debt. For example, a lender may agree to let you pay $2,500 to eliminate a $5,000 debt you have. Debt settlements can save you a lot of money and improve your score. The only catch is that you need to ensure that you work out a deal with the creditor. Ask them to put in writing that they will eliminate the debt you're trying to eliminate.
If all else fails, you can always increase the amount of work you do so that you can earn additional monies. There's nothing wrong with putting in some extra hours at your job or picking up a part-time job just to pay down debt. Doing this will get you one step closer to where you want to be in terms of debt recovery. You're doing well if you're in your 20s. That means you have plenty of time to straighten out your situation and rise above it. Don't doubt yourself at all.
You can find your way out of overwhelming debt by using the steps we've outlined above. It's not too late for you to make a full financial comeback and get everything you want out of life. It's up to you to commit yourself today and start taking the steps necessary to achieve success.
Katie earned a BA in English from WWU and loves to write. She also adores hiking in redwood forests and photography. She feels happiest around a campfire surrounded by friends and family.