Getting into debt is very easy but getting out of debt is quite a different story. Fortunately, there are multiple option available to you to deal with your particular debt problems, so there is no need to feel lost. Everyone has a unique situation that requires different methods in order to become debt free. Out of the three most common debt relief programs, there is sure to be one that will work for you.
1. Debt Consolidation
Consolidation debt relief programs are suited for those who cannot afford their minimum payments. With professional help you can develop better strategies for dealing with your debt. Your counselor can help you formulate a debt reduction strategy that takes your balance, term and interest rate al into consideration. Debt consolidation can result in interest rates from creditors being lowered or a consolidation of debts into a single monthly payment. This option is most appropriate for consumers with good credit ratings and substantial equity in their homes.
2. Debt Settlement
Debt settlement options are used when debt becomes too much for the consumer to handle alone. These debt relief programs involve a third party to collaborate with you and your creditors to come to negotiate a percentage of what you owe and is treated as paid in full.
Filing for bankruptcy should be seen as the last resort of debt relief programs. Bankruptcy should only be considered an option when you are no longer in the position to pay your creditors. Your assets such as possessions, home and income can all be taken to pay debts. Furthermore, bankruptcy will seriously impact your future credit ratings for up to 10 years after. This debt relief programs will free you completely from most debts so it’s a valid option when none of the others are suitable.