Although debt has now become a part of our lives due to our modern lifestyles, but too much of it makes the life difficult and stressed. There are two possible solutions to resolve this problem and restart your financial life afresh. These are either file for bankruptcy or contact a debt settlement company for negotiation. Before you decide on either of the options, it is essential for you to know the positives and negatives of either option to get away from your financial burdens, it is better to consult legal layer as well so that you will not be in a position to face any legal problems at later stage of your life.

Find out the severity of your debt problem first by reading the following steps given below:

Step1

Collect your credit report from either of credit reporting agencies. Three such agencies are working in the U.S. and they will help you out in effective manner.

Step2

Evaluate and access your credit report. Thoroughly check for inaccuracies, like inaccurate personal information, accounts with balances that have been paid for and those that don’t belong to you. This is important at the time of settle down your debts.

Step3

Determine the exact amount of debt by adding together the balances of credit accounts, secured and unsecured loans and collection accounts.

Step4

This information should be used when you take your decisions regarding filing for bankruptcy or use a debt settlement agency to solve your financial problems, but select the best agency to solve your problems because the selected agency should be able to understand your requirements very clearly.

Also do check up your monthly finances as well.

Step5

List your monthly earnings such as paychecks, rental interests &income and bank investments, mutual funds investment, etc…

Step6

Also list your compulsory monthly expenses like housing, rental, insurance, transportation, doctor visits, prescriptions, groceries, child plan, utilities and education-related expenses.

Step7

Subtract your total monthly expenses from your overall monthly net income. The balance received after calculation indicates whether or not you have some expendable income that you could probably use to pay your debts easily.

The next step is to determine whether the debt settlement is the correct step or not through proper legal counseling as well.

Step8

Study and find out if you can pay your debts just with your present income. If the income or earning is not more than expenses like housing expenses or loans if any, groceries, utilities and essential financial requirements for the month then debt settlement is not a feasible solution for you. Conversely, if monthly your earnings exceed the essential living expenses, then debt settlement might help you to resolve your financial burdens and stress.

Examine your debt situation to find whether your unsecured debt is enough to qualify for employing debt settlement services. This can be done by examining the owed amount. To qualify, for this option you need to have $7,500 as unsecured debt. However, this qualifying amount varies with different debt settlement companies.