Being in over your head in debt is one of the most overwhelming and stressful thing you will have in your life. Constant streams of calls from bill collectors, arguments with family over impending bills, even getting sick from worry and stress can all be par for the course. If you’ve come to the realization that you need help to get your debt under control and paid off, then you need to be made aware of what options there are for getting out of debt and staying that way. If you want to sleep easy knowing you’ve made the right decision for you and your family, then take a few minutes to read through this article which explains what your options are and how each works to get you one step closer to financial freedom.
The three options available to you are credit counseling, debt settlement and bankruptcy. All three are excellent ways to get on the road to erasing your debt for good, but each have pros and cons to them as well. Not all methods are good for all situations, so you should be sure to evaluate your wants and need before making a decision on which option to choose. Let’s take a look at the first option.
Credit counseling. The most commonly known method of debt relief help, in this type of program, you will be paying down your debt in monthly installments via a third party company. You will have lower interest and payments on all your outstanding balances to creditors. Lower interest and monthly payments mean that you will be able in theory to pay off your loans much quicker than if you were paying the creditors directly yourself. The third party company will charge a fee that is tacked onto the monthly payment. Some people are very successful with this type of program, others not so much. You may find this program useful if you have a smaller amount of total debt.
Debt settlement. In this option, a third party company will work with your creditors directly to negotiate a settlement amount that is a percentage of the total balance owed. Consumers pay into a separate account and these funds are used to pay off creditors. You do not make monthly payments to your creditors when you are in this type of program, rather pay monthly agreed amounts into your savings account. It will affect your credit score negatively. You will also want to be sure to read all fine print for details of policies, procedures and fees the company will charge.
Our last option is bankruptcy. This is a last resort for most people with large amounts of debt. There are two types of bankruptcy you can file for, Chapter 7 and Chapter 13. Chapter 7 eliminates all debt owed, while Chapter 13 attempts to restructure debt to be paid back. You should talk to a reputable lawyer about your case to see which is the best option for you. Each state has different filing requirements.
