Avoid Bankruptcy With Debt Consolidation
Welcome to Debt Consolidation Pro
Freedom from debt is a much coveted dream by everyone who is in debt. If you are one such dreamer, then debt relief solutions can now turn your dream into a reality. There are thousands of US debt relief companies that are out there for you to find and seek debt relief advice and options. There are different steps to debt relief for different debt situations.
Different Debt Relief Strategies
If you are having problems in just saving enough money to make more than the required monthly payments and get out of debt, then credit counseling may do the trick. Credit counseling is such a debt relief option in which you are advised by experts on money management methods and ways to live within your means so that you not only come out of debt, but you also don't fall in debt again. If your situation is slightly more critical so that you have multiple unsecured loans such as credit card debts, medical bills, payday loans and so on, and you are only just being able to make the minimum monthly payment on them, then debt consolidation or debt management maybe the correct option for you. In case your situation is worse and you have already defaulted on your debts and are unable to make even the minimum monthly payments then either debt settlement or bankruptcy is your debt relief option after taking into consideration some other factors. Here we have discussed about the 4 major debt relief options; debt consolidation, debt management, debt settlement and bankruptcy in details.
- 1. Debt Consolidation Debt consolidation is amongst the most well known and also most in use debt relief option. You can consolidate your debts on your own or you can take debt consolidation services from a debt consolidation company. A debt consolidation company can either provide you with a debt consolidation program or a debt consolidation loan while if you consolidate your debts on your own you have to do it through a debt consolidation loan. Read on to know about both these methods in details.
- Debt Consolidation ProgramThis is exclusively meant for professional debt consolidation as debt relief. When you approach a debt consolidation company, they will offer you a debt consolidation program. A debt consolidation program will initially provide you with a negotiator who will evaluate your financial situation. Then he will consult with you and decide upon an interest rate that you are comfortable paying on your outstanding debt. After this the negotiator will hold discussions with your creditors to reduce your interest rate to the amount that you have agreed upon. After the negotiations are over, you have to give the negotiator a certain sum of money every month, which he will distribute amongst your various creditors as your debt payments. Thus you are able to merge your many debts into one through this program.
- Debt Consolidation LoanA debt consolidation loan can either be provided to you by a debt consolidation company as a part of their service, or you can take it out on your own. When a consolidation company provides you with a loan, they give you a low interest on the loan so that the debt payment that you have to make become lower. When you take out a debt consolidation loan, it is usually a secured loan like a second mortgage which has collateral, in this case your home. The advantage with such secured loans is that, since the lender has a guarantee, they charge you lower rate of interest. Thus with both the debt consolidation loans you can pay back your multiple smaller debts and are left with paying back just one loan which has low rate of interest.
- 2. Debt Management This method of debt relief is quite similar to debt consolidation in essence. A debt management company initially provides you with a free credit counseling session giving you tips on how to save money and stay out of debt. The second part of debt management involves the working of a counselor on behalf of the debt management company to negotiate with your creditors and reduce the interest rate on your outstanding debt. This is done so that you can make the debt payment faster and your debt becomes much more affordable. You also get to save money on interest payment.
- 3. Debt Settlement An option for those you are almost drowning in debt. With debt settlement you can reduce your outstanding debt payment itself by 40% to 60%. It is advisable that you take help from a debt settlement company in doing this as they are more well versed in how to negotiate with your creditors and what to say. They also will be able to take care of other aspects such as papers works during the process more meticulously. With debt settlement you have to make the payment as a lump sum one. Perhaps the most valued advantage of debt settlement is that it helps you to avoid bankruptcy which can be lethal for your credit history.
- 4. BankruptcyBankruptcy to debtors is like the silver lining in the dark cloud. When all other debt relief option fails, you can go for either Chapter 7 or Chapter 13 bankruptcy. Usually Chapter 13 bankruptcy is for the ones who still have a steady source of income, no matter how less it is. Bankruptcy is a legal process that involves summons from the local bankruptcy court. Once you file for bankruptcy all your debts and assets are handled by an appointed individual from the bankruptcy court. He even deals with your creditors. It is usually advice that you avoid bankruptcy as it affects your credit scores severely and makes it almost impossible for you to get a loan or credit for a long time.