Drastic Debt Solutions - Is Selling Your Assets To Pay Off Debts A Smart Idea?

Some debt solutions make sense, while others are not so smart. Is selling your assets a good option to meet your debts?

Yes, sometime it is. In this article we are going to cover the pros and cons associated with selling your assets in order to save yourself from the pain of paying off your debts.

The benefit of selling your assets may vary for different people depending on many factors such as; the nature of the debt, the amount of the debt, the resale value of the asset, the future prospects of retaining the asset, etc. In order to understand whether this debt solution is right for you, you have to assess your situation and work out the best option for you.

Two Types of Assets


There are two types of assets: the appreciating ones and the depreciating ones. Appreciating assets include immovable property such as your land, house, or a rented place and some movable assets such as jewelry, antiques, old paintings, etc.

Depreciating assets include your vehicles, used furniture or other articles, books, etc.

If you have decided that the best debt solution for you is to sell some of your assets, then the best assets to sell are the depreciating kind.

Suppose you owe a credit card debt of $2000, you may easily pay it off by selling old stereo equipment or a TV that you no longer use. These days it is easy to sell anything on ebay. Plus if you sell stuff through ebay, it is easy to check the value of the asset.

By the way, you need to make sure that by selling your old asset you are not forced to buy a new one to replace it. If you do not have an alternate means of transport for your daily conveyance, there is no point in selling your old car. It may take a long period of time for you to buy a second one, and so keep it in mind that you go for the resale wisely.

Hold a Garage Sale


Another option, instead of selling one or two big assets, is to hold a garage sale. By displaying all your unused items including the old furniture, paintings, and clothes and accessories in an all-in-one garage sales display, you can attract prospective customers.

Though the individual items may not offer significant prices, you may earn a lot of money from the collective money offered by these unwanted items that have been messing up your house for years.

However, if you owe a debt that is not manageable by the above assets, you may think of divesting your most valuable assets, such as your property or jewelry.

Here too, you need to consider the financial benefits rather than thinking only the emotional benefits of getting rid of your debts versus what you get emotionally from having that jewelry or other valuable assets.

For example, you may think of reinvesting a part of the resale value of your asset after meeting your debt obligations. This will definitely give you double benefits - you get to retire your debts and you get something new to replace the asset(s) you sold.

The Emotional Effects of Selling Your Assets


One thing I do not want to overlook is the emotional strain of selling some of your assets to get rid of some of your debt. Even though you are getting rid off your costliest debts, it is painful to realize that you are losing one of your most valuable assets.

Therefore, it is important that you prioritize your assets before selling them. For instance, you may decide to keep some stock or bonds you own, as the appreciation on these investments could help you build a big retirement account. You may instead go for selling your jewelry, as the appreciation on them is not as high as compared to that of the stock or bonds.

By "not as high" I am talking about missing out on the investment gain from your assets. Because no matter how much those current debts are squeezing from you in terms of interest, if you're selling your assets to pay off debt, you are sacrificing the future gains from your assets.

At the end of the day, selling your assets is a great debt solution for you to try, but it is one that usually is a last resort. Before you go for this "drastic debt reduction plan" you should try and see if you can use any of the simpler debt consolidation or debt elimination options that are available to you.

Debt Collection--Some Tips for Dealing with Old Debt

The business of debt collection has become very lucrative and the collection of "old" is on the rise. It would be wise to know your rights when it comes to getting collection calls for old debt especially debt that is excess of seven years and no longer appears on your credit record.

1. Be aware of the statute of limitations in the state you live and in the state the debt was incurred if they are different. If it has expired, the collection agency will have limited legal options.

2. You may want to ignore the call. If the statute of limitations has expired they have very little recourse and you have a lot to lose by negotiating repayment. Repayment could cause it to be relisted on your credit report again.

3. Write them a letter and send it certified mail. Do not admit to the debt. Once they have received the letter the law prohibits them from contacting you again.

4. Know what your rights are. A copy of the Fair debt Collection Practices Act or a copy of "Money Troubles" by Leonard will familiarize you with what your legal right are.

5. Watch your credit report. If you see something on your credit report that is incorrect, you can dispute it with the credit bureau. If the reporting agency or creditor can not prove that the information is correct, it will be removed.

6. If the statute of limitations is still current, you may want to try to work out a settlement with the agency. Negotiate with them and see what you can get worked out.

Collections has become a very lucrative business. Knowledge is power. You will best be able to handle your debts if you know what your rights are and where you stand.

Debt: Don't Pay Your Minimum Balance

Almost all Americans carry credit card debt. Actually, over 40% of United States households pass more than than they earn. If you're wish most of us, you seek not to believe about how much money you owe and what that debt is really costing you. If you did, you might not kip too well. However, by not fully understanding your current financial state of affairs you are only prolonging the problem. In order to free yourself of unsecured debt, you need to confront the uncomfortable and often painful fact: it is very possible that your current debts may take you 30 old age to pay off.

That can’t be possible you say! I only owe $6,000. This should be paid off a couple of years. My credit card company would not make something so unethical to me, would they?

As a matter a fact, they would. In fact, if you took 30 old age to refund your debts, you are an ideal credit card customer. It's important to recognize that the credit card companies only allow you to do minimum payments because it profits them. This is not a good thing for the credit card holder. They do not make this out of generosity; this is how they make money.

By paying only the minimum monthly payment each month, you are virtually guaranteeing that you will be a client for life. If you are genuinely concerned about your financial wellbeing, you should be adamantine about paying more than than lone the minimum balance on your credit cards each month. You must stay cognizant of the fact that if you can't afford to pay more than than the minimum balance on your card each month, you can't afford whatever it is that you are buying.

When making a credit card payment, your finances are separated into two parts; interest and principal. Traditionally, when you only do minimum payments, most of it travels towards interest that is paid to the credit card company, which is why it takes so long to pay off your debts. Would you pay $10,000 for an point that is priced at $5,000? If you purchase that point on a credit card that is exactly what you're doing. If your credit card have an 23% interest rate and you only pay the minimum payment each calendar month you will never get ahead!