This may result in filing for bankruptcy or being subjected to liens. This raises the question of how to eliminate debt. There are many methods which can be used, depending on how serious the debt is, how hard the debtor wants to work at reducing the amount of money owed and whether the person owed money is intent on being repaid.
Reduce Consumption
Many people live beyond their means, paying everything by credit card or through financing companies. Rather than buying things with price tags that exceed income level, consumers can buy less expensive items. Instead of purchasing three vehicles for two people, for example, they could only have two. Rather than buying brand-name products for everything, store brand or off-brand products with the same quality level could be purchased for less.
Redemption Service
One means to legally eliminate debt is to become a secured party creditor through the UCC-1 redemption process. This is an avenue which, when followed carefully and accurately, involves operating as a secured creditor over any possible liens and debt collection attempts for one's debt. This requires the filing of a Uniform Commercial Code (UCC) form and other procedural paperwork. It can be done legally when all proper protocols are followed.
Filing Bankruptcy
Another way of reducing indebtedness is to declare bankruptcy. This is a legal action filed in the federal court. It is a statement by the person that they cannot pay their debts and wish to have them forgiven. There are many rules and regulations involved in a US Bankruptcy Court filing, and it must be done correctly to have the proper effect. An attorney's assistance may be beneficial for someone who is not intimately familiar with the bankruptcy system. Most people are not. Bankruptcy requires disclosure of all financial information requested, including a list of creditors. Those that are secured with collateral will receive compensation before those that are unsecured. If the judge or other parties involved in the bankruptcy case do not believe the debtor is being honest and forthright about the lack of funding available, they may impede the closure of the bankruptcy case.
Make More Money
Working one job is plenty for most people. Often, however, the salary is not enough to meet expenses. Instead of exceeding income and going into debt, the person could find an additional job. This would increase income and counter-balance the amount of spending versus income. As a result, the additional income could be used to pay off debt. This may require a lot of hours spent away from home or working in a place they may not enjoy for lower compensation. Once the amount of unwanted debt is paid off, however, the consumer could stop working at the second job.
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