It seems that most Americans have over spent themselves or have had some type of hardship that has put them in debt. Health insurance is a whole other story, but so many people are stuck with overwhelming medical bills.

So how does one get out of debt, what are the options to pay off the bills you just can't afford?

Well it all depends on that persons situation. It will depend on how much debt and what type of debt that person has.

If you have under $8,000-10,000 there are a few options for you. If you have over $10,000 dollars in debt you have a few other options.

Then again it does matter what type of debt it is. If you have secured debts, taxes owed or some Government backed loan or only have a few options. But if your debts are unsecured credit cards, medical bills, personal loans, or repossessed auto loans you have quite a few options to get out of debt.

If your in the situation of over $10,000 in unsecured debts like credit cards, medical bills or personal loans you could do one of a handful of things like "do nothing", "pay them back", "file bankruptcy", "credit counseling", "debt settlement", "credit repair", "debt consolidation", or if a home owner "2nd mortgage".

If you "Do Nothing", well some of your debts mike "Charge Off" basically the creditors take them as a loss and it really hurts your credit FICO scores for many years afterwards. On the other hand, the creditors might try and sue you, if so, they might be awarded a "Judgment" and then they can "Garnish" your wages or income. Keep in mind that when this happens, only one creditor at a time can garnish your wages, so if you have multiple creditors, it could take many many years for you to pay them off and start to repair your credit. Judgments can stay on

You could just pay them back. If you can afford to double or triple your monthly payments to cover the minimum payment plus a lot towards your principal balance then you might be able to pay off your debts in a somewhat reasonable amount of years maybe 5 to 10 years. Or win the lottery, but those odds are in the hundreds of millions, so try not to rely on that. But anyone that can afford to pay their debts probably isn't reading this.

Then you could file bankruptcy, but that will ruin your credit your 7-10 years, and never leaves public-record. Meaning that if an employer or another creditor runs a background check they will see that you filed bankruptcy. You also have to involve attorneys to file your paperwork, that can be very expensive. On top of that they have changed the laws of bankruptcy making it much harder to qualify. Since the credit card companies starting loosing too much money they lobbied congress to change the laws and make it harder to just walk away from your debts, that way they safeguard there money from just being written off in someone's bankruptcy.

You could also look into credit counseling, but with over $10,000 your looking at a very long program that will have drastic effects on your credit scores since it basically ends up looking like a bankruptcy or charge-off. Since the credit counseling companies only negotiate your interest rate and not your dent amount it takes many many years to get the debts paid off. Plus these companies say they are "nonprofit" but they actually paid-for and sponsored-by the creditors themselves. So you can tell where their true interest lies.

Now credit repair is really better for people with less than $5,000 in debts. Those companies can help you find what debts should be paid first, which have the biggest effect, help you write letters to remove dents, and basically repair your credit. This is not very helpful with higher debt amounts.

A debt consolidation loan, you do have to qualify for and most of the time with collateral. You will need good "debt to income" ratio, and good credit to qualify. So most of the time this option is unavailable to most people. Since once the average person in in debt their "debt to income" ratio is way to low, and their credit scores are bad, not allowing them to qualify for the consolidation loan.

If the person is a home owner they could refinance, take out 2nd mortgage or even a Home Equity Line Of Credit (commonly called a HELOC). But why attached unsecured debts to your home? It's like taking short-term debt and turning into long-term debt. The debt won't go anywhere but stay as a lien against your home. Plus if in the future if you get into another hardship and you already used your equity, now you risk loosing your home to the bank.

People with over $10,000 in unsecured debts, their best option is normally "debt settlement". Since the program is normally under 3 years, and those companies actually negotiate your debt amount and can drastically lower your debt between 40-60% lower than what you owe. These program can have a very affordable monthly payment and can be less than 36 months long.

About the Author

My main focus is to help people see all the different ways to get out of debt sometimes it is with the programs that my company offers and sometimes it's another option that is a better way. My job is to help you find the most beneficial way to get out of unsecured debt.