Debt Relief Options – Take Action!
Today it’s quite common for families – and individuals – to carry $20,000, $30,000, even $50,000 or more of credit card or other unsecured debt. Most of us are optimistic by nature, and since it’s normal to experience financial ups and downs in life, many people just ignore the problem and hope things get better down the road.
Sometimes, problems do take care of themselves when we put our heads down and just keep working. Unfortunately, when you are buried under excessive personal debt, this is rarely the best strategy.
When you’re drowning in credit card debt or other unsecured debts, and you want to take a more proactive stance to getting debt free, there are basically five debt relief options to choose from.
Here is a brief description of each of those five debt relief options.
1. Continue making minimum monthly payments.
As long as you are able to make minimum monthly payments you may feel you’re doing the right thing by continuing on that same path. But this just may be your worst strategy for debt relief.
2. Credit Counseling or Debt Management.
Credit counseling is a debt management program in which you make a single monthly payment to a credit counseling agency. In turn, that agency distributes the money to your creditors on your behalf, ideally at lower interest rates so you can pay off the debt faster. You still end up paying back 100% of your debt plus interest. These programs are designed to take 3 to 5 years and have very low completion rates.
3. Debt Consolidation.
With debt consolidation you take out a larger, low-interest loan and use that money to pay off your higher-interest unsecured loans. This leaves you making a single monthly payment that is – in theory – lower than what you were paying for all of your credit card and other unsecured loans. This can be a good debt relief option if you have debts spread over many different sources.
4. Debt Settlement or Debt Negotiation.
Debt settlement differs from the first two options in that the actual principal balance you owe is negotiated downward. Because you end up owing less, debt settlement is generally a faster and less expensive debt relief option than either debt counseling or debt consolidation.
For the individual who cannot meet his or her debt obligations, bankruptcy may be inevitable. A formal declaration of bankruptcy stops the creditor collection process, and the debtor no longer owes some or all of the unsecured debt.
Each of the five debt relief options has its advantages and disadvantages, and may be the best – or only – option depending on your specific circumstances. Visit the individual pages to learn more about each option or give us a call at 800-527-4421 and one of our debt relief specialists will be happy to help you.