America is in Debt

America is in Debt. It's no secret. Between this terrible recession, the crazy number of foreclosures, and home prices dropping significantly, people have been forced to rely on debt even more than usual

The national problem with unsecured debt, typically in the form of high-interest credit cards, is partly to blame why payday loans became a necessity for some. Unsecured debt threatens to become an issue of comparable significance as consumers scramble to find an appropriate solution. The good news is that there are solutions available, and that there is one that is likely to suit your circumstances better than the others. Each has its own set of benefits and shortcomings, and it is imperative for the consumer to collect enough information to make the proper choice of a solution.

Sadly, many consumers have compounded their financial predicaments by choosing a solution that was a poor fit for their particular situation. An online cash advance helps the problem in the short-term, but it's far from a good solution. Often times, this 'solution' causes more stress than the original problem, and compound interest can be killer.

There are 5 main categories of debt relief solutions to choose from. They are listed here in the order of the severity of the debt problem, from the least severe to the most:

1. Frugality - Reduce expenses and increase income if possible. This can solve a small problem, but when you're really feeling the pinch, keep reading.
2. Debt Consolidation - Take out a HELOC to pay off the high-interest debt. Unfortunately this solution is very difficult to implement due to the loss of equity most homeowners have experienced. Tight lending guidelines now dominate the lending industry.
3. Credit Counseling - Consumers can enroll in a debt management plan (DMP) to reduce interest rates, stop over-limit and late fees, have a consolidated monthly payment, get relief from collection phone calls, and become debt-free in 5 years or less. It's a drastic step, but has worked for some.
4. Debt Settlement - Sounds good, but there can (and will) be a major hit on your credit report. Maybe the costs are outweighed by not having that burden hanging over your head?
5. Bankruptcy - Chapter 7 or a Chapter 13 repayment plans are available, but a new 2-part "means test" for Chapter 7 that was instituted in 2005 effectively disqualifies many filers and forces them into Chapter 13 instead. The consequences for the consumer's credit are severe, lasting from 7 to 10 years. This is definitely a last resort and this decision should NOT be taken lightly.