How Debt Solutions Work
You may have tried to compare debt management programs on your own and met with frustration. We are confident that our educational approach will help you gain a better understanding of the solutions available and help you choose the best program to fit your individualized needs.
There is more than one valid debt solution to consider. The right strategy aimed at bettering your financial situation, can help you in avoiding bankruptcy or foreclosure. Please take a few minutes to read through the information here and arm yourself with the knowledge required to choose the right solution for you.
Valid Debt Reduction Solutions
The first thing to consider is if your situation even warrants a debt program. If you are able to continue to make your minimum required payments without borrowing additional funds, and meet your monthly living costs, then you should continue to do so. What you really need to do is find expenditures to cut from your household budget and apply the additional funds to paying off your debts. This required discipline and is not easy, but the important thing for you to know is that anything else you do outside of paying your regularly scheduled payments on time month after month, will be reflected on your credit reports.
No debt solution will be easy, but below are the legitimate options you have when you are unable to maintain your minimum payments.
- 1. Debt Reduction through Debt Settlement
Probably the most popular debt reduction program available. You pay a reduced payment monthly into a settlement savings account while negotiators work out settlement agreements on each of your accounts. Best suited for consumers in financial hardship that cannot pay minimum payments. Typical program gets you out of debt in 36-48 months. [ Learn more ] - 2. Consumer Credit Counseling
You pay a slightly reduced monthly payment to a credit counseling company who in turn attempts to gain a reduced interest arrangement with each of your creditors. Small monthly payments to each creditor are made on your behalf to each creditor. Only suitable for consumers who may be current now and are willing to continue to pay their minimum payments plus a monthly fee to a credit counselor to reduce interest. Typical program is 5 years (60 months). [ Learn more ] - 3. Bankruptcy
Bankruptcy is a legal solution to resolve debt and should only be used as a last resort. A "chapter 7" completely dissolves all applicable debt and stops all collection efforts, however consumers with assets and a solid income may not qualify. A "chapter 13" is a court approved debt workout plan where your creditors are forced to accept only a fraction of the balances, while you make a court-mandated monthly payment. Bankruptcy is a public court action and will result in a public record that will also remain on your credit reports for up to 10 years. [ Learn more ] - 4. Debt Consolidation Loans
In today's lending environment debt consolidation loans are virtually non-existent. If you have decent credit and substantial equity in your home, you may qualify for a home equity consolidation loan to pay off consumer debt. This is really only a solution for those in good financial shape that wish to better position debt, and is not really effective for those in financial hardship. [ Learn more ]
Consumer Comments
"There was no way I could continue to make my minimum payments and I was thinking bankruptcy. The advisor you connected me with helped me forumulate a plan to get out of debt in just over 3 years with a payment that I can actually do! Thanks." - Sara Thomason, Georgia