Staying in control of your debt and paying it off as soon as possible is everyone’s goal. However, when you are struggling with mounting debt, high credit card rates and unstable employment it is important for you to know that there are different approaches to managing your debt. The solution that is right for you depends on your circumstances. Our experienced professionals will help you review your options and determine which solution fits best in your particular situation.
Credit Counseling/Debt Consolidation
This is a program that enrolls you into a debt management plan, which usually results in receiving lower interest rates from your creditors and can therefore expedite the time it takes you to pay off your debt. It is important to understand that in a credit counseling program you will be repaying 100% of your debts, but with lower monthly payments due to a lower interest rate. While most of these programs do not impact your credit score, enrollment in this type of a program does show up on the credit report and is not always looked upon favorably by lenders. If your financial situation is more serious and requires a significant reduction in monthly payments, credit counseling may not work for you.
This is an aggressive program that is designed to negotiate and settle your debts for less than you owe, in many instances reducing outstanding debts by as much as 50%. Debt settlement is often the cheapest way to settle your unsecured debts while avoiding bankruptcy. It is important to be aware of the credit score impact. But, if resolving your debt for a low cost is your main goal, debt settlement may be the right solution for you.
This should be your last choice for getting out of debt because it will damage your credit for at least 7 years. There have also been legal changes to a Chapter 7 Bankruptcy, which completely discharges all debts and more people are forced to file for a Chapter 13 Bankruptcy, which is really a long term repayment plan.
Still can’t decide? Below are some tips for your own quick evaluation:
If you can afford a healthy monthly payment and you want to protect yourself from collection and from going delinquent — consider Credit Counseling.
If you want the lowest monthly payment and want to get debt free for a low cost and short amount of time, and you are willing to deal with adverse credit impacts and collections — then evaluate Debt Settlement.
If you cannot afford an dollar amount in a monthly payment — consider Bankruptcy.