Heavy debt is a terrible load to carry. It eats, sleeps, and travels with you. Debt can disrupt relationships, peace of mind, and your life in general. Obtaining relief is necessary to crawl out from under the problems that debt creates. Fortunately, debt relief is not one-size-fits-all. Depending on your circumstances, a debt relief option probably exists that is just right for you.
1.) Debt counseling should be the first step.
Debt counseling is the first step to getting the best debt relief for you. A good counselor may be able to help you navigate your way through the quagmire without additional help. It may be more of a problem with priorities and budgeting than debt. The counselor can help you set a course to freedom. You can consult local television stations or the Better Business Bureau for guidance. These types of counselors are often used as consultants for television and radio stations for their public service requirements.
2.) Several types of debt relief are available.
The easiest type of debt relief is debt management. While some will argue against it, debt consolidation has helped many find a way to reduce crippling interest rates. Settling debts can be a painful process, but is often the shortest route to eliminating debt without bankruptcy. For some, a little relief is enough. Partial debt consolidation or settlement will reduce or eliminate the most difficult of the debt and make it tolerable. The ugly way out of debt is bankruptcy, but it is effective.
3.) Debt Management:
The process of debt management can be accomplished by you or a third party. It requires a plan and a lot of work to set up. Each creditor must be contacted regarding your situation. An agreement for paying off the debt must be achieved with each creditor individually. The final total payment amount needs to be an amount that fits your monthly budget.
4.) You have to meet your due dates.
The agreement is nullified if you miss more than a set number. Usually, only one or two misses will be allowed. This is why debt management works best when you use a third party rather than setting it up yourself. These agencies accept one large payment from you and disperse the appropriate amount to each creditor on time each month. The large payment may seem scary, but it will be 25% to 50% less than you are paying now with much more favorable interest rates. The amount of your monthly payment applied to principal will go from a few percent to somewhere between 40% and 50%.
5.) Debt Consolidation:
This type of debt relief has held up as a popular choice. The idea of debt consolidation is to make a new large loan that swallows up several small ones. By converting several unsecured debts into one that is secured, you can usually get a favorable interest rate and a lower payment. What makes this debt relief popular is that it impacts credit scores more positively than debt management. However, it does not eliminate debt more quickly, and you may have to put your home at additional risk with a second mortgage.
6.) Debt Settlement:
Except for bankruptcy, debt settlement is the most uncomfortable way to get debt relief. A settled debt does show up on your credit report. To get a settlement, usually means that you have to endure collection calls. It often requires you to simply not make a payment to your creditor for awhile to get them to want to settle. Unless you have fairly thick skin, you may find this route very painful to your ego. Even if you use a third party to settle (these are usually attorneys), you will still get the ugly phone calls and possibly even a summons or two for a court date before the settlement is reached.
7.) Partial Debt Relief from Consolidation and/or Settlement:
This route is a lot like the preceding two options. The main difference is that you leave some of your debt out of the equation. Since the debt on your home does not usually get included in this process, most of the time consolidations and settlements could all be considered partial. In this case, the idea is that you have some unsecured debt that you leave out of the process. You may have a small bill to a hospital, doctor, or even a credit card. Because it is small, you might find it easier to just pay that one off separately from the agreements sought with other creditors.
8.) Bankruptcy:
Of all of the debt relief options, this is the one that most people prefer to avoid. It impacts your credit history for seven or ten years depending on your state. Bankruptcy also costs you upfront money for an attorney. It invades your privacy far more than any other type of debt relief. You must produce 6 months or more of bank statements and other financial data. Your income is verified.
9.) In some states even the hearing is unpleasant.
While the adjudicator is not usually offensive, you may find yourself with a gallery spectators waiting for their turn before the adjudicator. Laughter and other annoying practices are allowed as people hear your private life made public. The process of bankruptcy can take 3 to 6 months to complete. Debt settlement is tough, but bankruptcy can be downright embarrassing. The big plus for bankruptcy is that when you get the notice that you bankruptcy has been approved, your debt is gone. However, you do have the right to leave some debts like your home mortgage out of the bankruptcy proceedings.
1.) Debt counseling should be the first step.
Debt counseling is the first step to getting the best debt relief for you. A good counselor may be able to help you navigate your way through the quagmire without additional help. It may be more of a problem with priorities and budgeting than debt. The counselor can help you set a course to freedom. You can consult local television stations or the Better Business Bureau for guidance. These types of counselors are often used as consultants for television and radio stations for their public service requirements.
2.) Several types of debt relief are available.
The easiest type of debt relief is debt management. While some will argue against it, debt consolidation has helped many find a way to reduce crippling interest rates. Settling debts can be a painful process, but is often the shortest route to eliminating debt without bankruptcy. For some, a little relief is enough. Partial debt consolidation or settlement will reduce or eliminate the most difficult of the debt and make it tolerable. The ugly way out of debt is bankruptcy, but it is effective.
3.) Debt Management:
The process of debt management can be accomplished by you or a third party. It requires a plan and a lot of work to set up. Each creditor must be contacted regarding your situation. An agreement for paying off the debt must be achieved with each creditor individually. The final total payment amount needs to be an amount that fits your monthly budget.
4.) You have to meet your due dates.
The agreement is nullified if you miss more than a set number. Usually, only one or two misses will be allowed. This is why debt management works best when you use a third party rather than setting it up yourself. These agencies accept one large payment from you and disperse the appropriate amount to each creditor on time each month. The large payment may seem scary, but it will be 25% to 50% less than you are paying now with much more favorable interest rates. The amount of your monthly payment applied to principal will go from a few percent to somewhere between 40% and 50%.
5.) Debt Consolidation:
This type of debt relief has held up as a popular choice. The idea of debt consolidation is to make a new large loan that swallows up several small ones. By converting several unsecured debts into one that is secured, you can usually get a favorable interest rate and a lower payment. What makes this debt relief popular is that it impacts credit scores more positively than debt management. However, it does not eliminate debt more quickly, and you may have to put your home at additional risk with a second mortgage.
6.) Debt Settlement:
Except for bankruptcy, debt settlement is the most uncomfortable way to get debt relief. A settled debt does show up on your credit report. To get a settlement, usually means that you have to endure collection calls. It often requires you to simply not make a payment to your creditor for awhile to get them to want to settle. Unless you have fairly thick skin, you may find this route very painful to your ego. Even if you use a third party to settle (these are usually attorneys), you will still get the ugly phone calls and possibly even a summons or two for a court date before the settlement is reached.
7.) Partial Debt Relief from Consolidation and/or Settlement:
This route is a lot like the preceding two options. The main difference is that you leave some of your debt out of the equation. Since the debt on your home does not usually get included in this process, most of the time consolidations and settlements could all be considered partial. In this case, the idea is that you have some unsecured debt that you leave out of the process. You may have a small bill to a hospital, doctor, or even a credit card. Because it is small, you might find it easier to just pay that one off separately from the agreements sought with other creditors.
8.) Bankruptcy:
Of all of the debt relief options, this is the one that most people prefer to avoid. It impacts your credit history for seven or ten years depending on your state. Bankruptcy also costs you upfront money for an attorney. It invades your privacy far more than any other type of debt relief. You must produce 6 months or more of bank statements and other financial data. Your income is verified.
9.) In some states even the hearing is unpleasant.
While the adjudicator is not usually offensive, you may find yourself with a gallery spectators waiting for their turn before the adjudicator. Laughter and other annoying practices are allowed as people hear your private life made public. The process of bankruptcy can take 3 to 6 months to complete. Debt settlement is tough, but bankruptcy can be downright embarrassing. The big plus for bankruptcy is that when you get the notice that you bankruptcy has been approved, your debt is gone. However, you do have the right to leave some debts like your home mortgage out of the bankruptcy proceedings.
