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1. Borrow against your home
If you own your own home, you have three alternatives. You could refinance it, get a second mortgage or a homeowner's equity line of credit, and then use the money to pay all of your debts. You would have consolidated them into one single monthly payment, which should be much less than the sum of the payments you're currently making. Of course, you have to have equity in your home in order to borrow against it. If you've been in the home for less than 10 years you may not have much equity because most of your payments will have been used to pay your interest and not to pay down your balance.
2. Use money from your retirement account
Do you have a 401(k) plan? If so, you may be able to borrow money from it. Most plans will allow you to borrow as much as $50,000 or 50% of what you have in your plan, whichever amount is less. You will have five years to pay back the money unless you leave the company in which case you'll have 60 days to pay it back. You will need to pay interest except you'll be paying yourself the interest and how neat is that? However, there is a definite negative if you don't pay back the money. In this case, the money will be treated a disbursement and taxed at your ordinary tax rate. Plus, you may have to pay a penalty.
3. Tap your life insurance
If you have a whole life insurance policy (not term insurance), it’s probably built up some cash value over the years. If so, you could borrow some or all of that money and use it to pay off your debts. With most policies, you can take as much time as you wish to pay back the money or not even pay it back at all. Of course, whatever amount you failed to pay back would be subtracted from your death benefit. In other words if you had a $100,000 whole life policy and borrowed $30,000, your estate would get only $70,000.
4. Negotiate settlements
This has become a popular way to pay off debt because unlike most other strategies, it's a way to actually get debts reduced. The way it works is that you contact each of your creditors and offer to settle your debt for 40% or 50% of what you owe. Many lenders will accept a settlement offer if you have been unable to make any payments for six months or longer. You will need to be able to explain how serious your financial situation is and that if they refuse to settle, your only alternative will be to file for bankruptcy. Of course, you will need to have the money available to pay off your settlements.
5. Take advantage of debt consolidation through debt settlement
We think the best way to consolidate debts is to let us settle them for you. The advantage of this is that you don't need to have the cash to pay for the settlements yourself. We will contact all of your lenders where you have unsecured debts and negotiate settlements that should save you thousands of dollars. Your debts will be consolidated in that once we have settled them, you will pay us each month until you complete your plan, which will take from two years to four years, depending on the size of your debt. We charge nothing up front. In fact you don't pay us acent until we have successfully settled all of your debts and presented you with a payment plan you approve.