4 Ways to Clear Your Personal Debt in 6 Months

Get out of debts

Americans are drowning in debt. Credit cards, personal loans, car loans, student loans—these debts are dragging us down, creating endless stress and hassle. The more debt you have, the more insurmountable it seems, but no matter how big it is, there is always a solution, a way to escape.

In this guide, we’ll look at the ways that you can eradicate your debt and go completely debt-free in just 6 months. That may seem like a long time, but most Americans remain locked into their debts for decades and over 75% die with some form of debt. All things considered, 6 months is not only a realistic timeframe, it’s also an incredibly short one!



  • Debt Forgiveness Programs


Credit card debt forgiveness programs can clear some, most, and even all of your debt; student loan forgiveness programs work in the same way. These options aren’t available to everyone and have specific criteria that you need to meet, but it’s always worth looking into them.

There are numerous reasons that your debt might be forgiven, including public sector employment and death. Click the link above to learn more about the options available to you.



  • Statute of Limitations


Every state has its own unique statute of limitations on debt. Once this period has passed, you are no longer legally responsible for the debt and can avoid all calls and letters safe in the knowledge that you can’t be summoned or sued.

If you make a single payment on an old debt, you will become legally responsible for it again. The debt collection agency may also tell you that you are still morally responsible for it, but if you haven’t made a payment and the statute of limitations has passed, you can ignore it.

This applies to all unsecured debts, including credit cards and personal loans. Obviously, it doesn’t apply to government debts or secured debts, as failure to pay will simply result in the collateral being cashed.



  • Debt Settlement Programs


A debt settlement company will contact your creditors on your behalf and try to negotiate a settlement. The best companies can settle old credit card debts for up to 90% of their original balance, which means that a $10,000 debt can be settled for just $1,000.

As preposterous as this seems, it works because settlements are made when creditors are close to giving up on them. As soon as the process starts, the settlement specialist will ask the client to stop making payments on their debts and start moving their money to a secured account.

For example, if you’re spending $500 a month on debt payments, most of which will be lost on interest, you will simply move that $500 to a different account. After 6 months, you’ll have $3,000 in your account and your creditors will begin writing off your debts and preparing to sell them onto debt collection agencies for cents on the dollar.

This is when the settlement specialist comes in, offering a single payment to cover the debt on the agreement that it will be settled and cleared in full. Because the creditor was preparing to sell the debt cheaply, they’ll be keen to accept, and that’s why debt settlement works so well.

Of course, it’s not without issue, as you may be summoned to court in that time and your credit score will take a hit, but if you have a lot of debt and very few options, this could be just what you need.



  • Debt Consolidation


In simple terms, consolidation works by swapping one debt for another, but it’s actually a little more complicated and beneficial than that.

If you have multiple high interest debts, each incurring fees and interest, only a small percentage of your monthly payments will actually go towards your balances, which means it’ll take longer to clear your debts. With debt consolidation, you’ll get a single large low-interest loan, use it to clear all these high-interest debts, and then focus on that single loan.

Debt consolidation comes in many shapes and sizes. You can take out a personal loan and do all of the work yourself, you can work with a debt management or debt consolidation company, or you can get a balance transfer credit card. It all depends on the type of debt that you have and how good your credit score is.