How To Use Debt Relief Options

Americans take on debt. If you are in debt and want to get out from under it, know that you aren’t alone. But are you in a position where you should consider bankruptcy? Though an attorney will be your best source for answering your questions, there are some general guidelines. 

Debt may be beyond your control to repay if your unsecured debts exceed half of your gross income—the amount you make before taxes and deductions. 

Unsecured vs. Secured Debt

The fundamental difference between these two types of debt is that secured debt is attached to an asset. Think of a home or a car loan. If someone defaults on one of these loans, the lender has the option of seizing the asset. 

In contrast, unsecured debt has no such asset. For example, a college loan is an unsecured debt. Consider the amount of unsecured debt you have and your ability to pay it off over several years (less than 5). If this is feasible, you may not be ready to think about bankruptcy yet. 

Debt Relief Options

After reading the above, you may be looking at your credit card (unsecured debt). A good start is to stop using the card and to make the minimum payment each month. Is this going to get you out of credit card debt rapidly? No, but it is a small step. Not only will it prevent you from late fees, but you are shifting your focus towards getting out of debt. 

Another option—which has both pros and cons—is a debt consolidation loan. The benefit of this is that you will eliminate the high interest rate connected to your credit card debt. And if you have multiple debts, you will narrow everything down to a single payment.  

On the other hand, there are some disadvantages. It can harm your credit score—but that can be fixed by making your payments on time and in full. One way people get debt consolidation loans is through a home equity loan. Please recall how a secured loan works. There is an asset on the line. With a home equity loan, your home will become that asset. 


If this is where you think your best option lies, it is highly recommended that you speak with an attorney. Not only can you discuss the particulars of your situation, but he can advise on your options. 

You will have to understand the differences (and eligibility requirements) between Chapter 7 and Chapter 13. 

Hedtke Law Group

At Hedtke Law Group, we are eager to help you get a fresh start. We discover what this looks like for each person’s needs because we are client-focused. If you are considering bankruptcy, contact the Hedtke Law Group to schedule your free consultation.