When you are burdened by an onerous amount of debt there seems to be no easy way out. Home loans, credit card outstanding, rent bills, electricity bills, installments on your car loan; the list is endless. It seems impossible to escape from the debt trap. But there is a solution to every problem, so you just have to get hold of the right debt solution. Given below are some of the debt solutions that will help you in leading a debt free life.

Debt consolidation: It is the process of combining all your debts into one single monthly payment with reduced interest rate. Merging all your bills into one payment implies one interest rate, which in turn waives off the monthly amount you shell out for debt repayment. Combining all your debts also eases off the process of paying multiple debts. After consolidation you do not have to go through the hassle of paying to 12 different creditors, you simply make a monthly payment to one creditor.

Debt settlement: Settlement of debts is different than consolidation. The payments that you make into the debt settlement program are not immediately dispersed to your creditors. Rather, your payments build up month after month until there is a lump sum amount of money accumulated to begin negotiating with each of your creditors. For instance, if you owe $10,000 to a creditor, then as soon as you have set aside $5,000, the debt settlement company will start negotiating with the creditor to take the $5,000 as full settlement amount.

Bankruptcy: It should be your last resort as its effects are lasting as well as far reaching. There are two types of personal bankruptcies- Chapter 7 and Chapter 13. What happens when you file for Chapter 7 is that you turn over some of your property to a trustee appointed by the bankruptcy court. The trustee sells your assets and disperses the proceeds among your creditors. In case of Chapter 13, the court decides a repayment plan for the debtor so that he can pay off his debts. Unlike Chapter 7, in Chapter 13 the debtor is allowed to keep his property.