When a person needs the best debt relief here are five options to choose from; debt consolidation loan, debt management or counseling, debt relief, personal negotiation, or bankruptcy˳ It is important to have an understanding of each one so you can choose the option that best suits you˳ Many people confuse these options, but each one brings unique aspects to the job of helping consumers pay off their debts˳ Some options may adversely affect your credit rating so you best check this, bankruptcy certainly does˳
Debt Consolidation Loan; this takes all of your debts and turns them into one loan˳ This works best if you are a home owner and qualify for this type of loan, which may involve refinancing your home˳ The objective is a debt consolidation loan with a lower interest rate that will enable you to afford to also pay off the principle so you eventually get yourself out of debt˳
Debt Management; often named debt counseling˳ These organizations work with consumers to help them learn to get control of their finances˳ Ideally debt counseling organizations teach individuals how to make a budget, a schedule to follow for paying off their debts and how to stick to it˳ They don’t offer loans or negotiations, seldom work with creditors and are non-profit, i˳e˳ don’t charge you any fees˳ Be aware though that some are a front to a profit orientated company so do your homework very thoroughly and if you have the slightest doubt this could be the situation keep looking for another company˳
Debt Relief: Debt relief companies are often named debt settlement or debt reduction and work best with credit card debt and unsecured loans˳
A good company will have a track record of 30% to 70% debt reduction, will set up a system where you pay them one amount each month and they then make the payments to your creditors˳ They go to your creditors on your behalf, work hard to negotiate a reduction on what you actually owe, plus they also negotiate lower interest rates and to have penalties and late payment fees removed˳ Your combined debts need to exceed $10,000, but at the end of this article if you click my website link I review a good company who will handle debts from $2500˳
Excellent option provided you choose a reputable company, preferably with commission based fees, is a good standing member of the BBB and some of the other important debt associations, like TASC, IOAPDA, USOBA or others˳ But do be aware some companies of this type have shown to be irresponsible and placed their clients in a worse financial position than before˳
Personal Negotiation: If your debt is smaller, up to $2500 perhaps $5000 then it makes sense to come to a personal arrangement with your creditor˳ Most creditors will listen to you and be willing to come to an agreement˳ Explain your situation and ask they reduce the interest rate, wave any penalties and even discount the amount owing so you can settle the debt quickly˳ You can help by selling the likes of unwanted household and sporting items and paying the proceeds to your creditor/s˳ Same if you have a tax refund or a bonus due˳
It is essential you keep to the conditions of the agreement, otherwise the creditor may quickly sue you˳
Bankruptcy: Bankruptcy is your final choice and should only be considered if the above options have failed and your debt is so large bankruptcy seems only way out˳ Get legal advice before proceeding as bankruptcy will affect you for many years˳
My next article discusses Why Use A Debt Relief Company, meantime check my review of my #1 choice for debt relief companies by clicking the link below˳
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