Emergency Debt Relief Options

Debt is one of the biggest problems in your financial life. When you get in over your head, you are faced with few options to get out bad situations. While it will not be an easy road back, there are emergency debt relief options available for you. Here are a few things you can do when you need credit relief:

Debt Consolidation

There are a number of companies that offer debt consolidation loans. With a debt consolidation loan, you will take out a loan that will pay off all of your creditors at once. The interest will be much lower than what you were paying to them and you can make one central payment to pay down the balance.

In most cases, you will be required to secure some form of collateral. If you have any equity in your house, a home equity loan is a great way to get the cash you need. Sometimes, refinancing your mortgage can help you get the money you need quickly as well.

Debt Counseling

Entering a debt counseling program is different from a loan because you still have the same creditors. A credit counseling service is designed to help you set up a plan to pay back your accounts. They will act on your behalf and come up with a repayment schedule to present to your creditors.

As a result, they will often cut the interest rates that you pay in return for a steady payment. You will not be able to use your credit cards or open any new accounts during this period.

Also, your credit score may not suffer too greatly because of the steady, consistent payments. If you are considering debt counseling, be sure to use a reputable company. Many companies claim to be debt counselors but are actually scams. They collect your money every month, but do not pay off your creditors.

Hard Money

Hard money loans are offered by private investors. There are many hard money lenders out there that will lend to distressed borrowers. They understand the risk that is involved and as a result, will charge you a much larger interest rate. While a regular mortgage rate may be in the 6 to 8 percent range, a hard money loan is commonly greater than 15 percent.

The loan terms are usually unfavorable. Most hard lenders offer large balloon payments, due after one or two years. This should definitely be your last resort, right before bankruptcy because these loans are tied to your mortgage. It is not for those that can acquire other means of financing.


No one wants to hear it, but bankruptcy is a last resort option. It will destroy your credit rating for a long time, but it will allow you to have a fresh start after a number of years. Depending on your type of debt, you may or may not get a completely clean slate.

There are two types of bankruptcies, Chapter 7 and Chapter 13. The key difference between the two is that one allows you to wipe out the entire debt and the other mandates monthly payments. The type of bankruptcy you are eligible for depends on the bankruptcy court and their requirements. It is possible to pick up the pieces after a bankruptcy, but it will take time to recover from the negative credit.

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