If you’re raising children as a single parent, you’re not alone. A 2013 survey from the Pew Research Center found that 34 percent of children in the U.S. live with just one parent at home. Single parents typically face more challenges than those raising kids with a partner, particularly when it comes to finances. A single income can make it difficult to make ends meet, leading to more debt. If you’re a parent raising kids solo and are looking for ways to get debt relief, you have a number of options.
Debt Counseling
Credit or debt counseling is often a first step towards debt relief. While counseling won’t reduce the amount you owe, it will help you put together a strategy for paying off your debts. Your counselor will work with you to put together a budget or spending plan that makes the most sense for your particular situation. He or she can also help you set goals for paying down your debt. Together, you’ll put a plan in place to help you make those payments.
Debt Consolidation or Management
In some cases, a debt management plan or debt consolidation loan might be an option for debt relief. A Debt Consolidaton Loan means that all of your debts are rolled into one loan, and you make a single payment to the lender each month. Consolidation loans can occasionally help reduce your interest rate and the amount of you need to pay over the long run, but can be difficult to obtain if you do not have sufficient collateral or income to qualify.
Debt management is slightly different. Offered by non-profit credit counseling agencies, debt management allows you to make one monthly payment, which your credit counselor then distributes to your various creditors. Typically, when you go into a debt management plan, your counselor negotiates with your lenders to get them to offer a reduced interest rate or to waive any late fees, so that you owe less. Debt management can be an effective tool for debt relief, as it allows you to pay off your loans and helps you learn to better manage your spending in the process.
Bankruptcy
Depending on the amount of debt you have and your ability to repay it or not, bankruptcy can be another option for relief. Since bankruptcy is a complex process and will stay on your credit report for up to a decade, it isn’t something you should rush into. As a single parent, it’s an option to consider if you’ve exhausted all other options. For example, you should only consider bankruptcy if you just don’t have the income to make the payments on a debt management plan or are taking out more loans to pay off the debt you do have.
Before you can decide to file for bankruptcy, you need to complete a counseling session. Your pre-filing counseling session will help you see where you stand financially and will help you weigh the pros and cons of filing.
CESI offers credit counseling and bankruptcy counseling to single parents in need. If your debt is starting to feel like too much and you aren’t sure that you’ll ever be able to pay it off, contact us today and start exploring your options for relief.
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