Consumer debt has turned out to be one of the major concern in the United States. Many don't even realize how overwhelming debt situations can be, till they actually face it themselves. If your debt loads have been bothering you for quite sometime and you're unable to get rid of them on your own, debt solution companies might help you. The companies can offer you professional guidance about legal debt solutions, so that you can achieve the desired result as soon as possible. Read along to know about the available options which can solve your payday loan and credit card debt problems. Compare them to determine which will be the best debt solution to suit your financial condition.
What are the popular debt solutions?
5 types of relief options can show you the way to a debt free life. For this reason, these 5 debt solutions have become popular among people who're struggling to get rid of their debt loads. Check them out to see how they can be of assistance:
Simple household budgeting can work wonders if done correctly. It helps to plan your finances, so that you can balance your income and expenses and still have enough room for savings. Effective budgeting can help you to make regular bill payments, and with enough savings, you can gradually get rid of your outstanding dues.
Budgeting can act like a boon, if you're struggling with your finances. Check out the advantages and the limitations that this debt solution comes along with:
Helps in financial management
Prevents wastage on unnecessary items
Encourages savings, which can be used to pay off debts and avoid further credit
Ensures steady credit score with regular bill payments
Is a slow and gradual process
Might not work as expected, with excessive debt amount
Debt management – Eliminate debts with affordable payments
Professional companies offering debt solution services can assist you to get rid of your outstanding bills and dues through a debt management program or DMP. After you sign up for their program, financial counselors associated with the company chalk out an affordable payment plan to help you manage your debts effectively. They not only offer you guidance about maintaining a budget, but also try to lower your debt payments by negotiating with your creditors for reduced interest rates. Find out the benefits that a DMP can promise and what are its disadvantages:
Can help you to avoid further borrowing
Reduced interest rates can result in affordable payment plan.
Budgeting tips from counselors can help you save and make regular payments
Debt solution companies can arrange single monthly payments with DMP
Doesn’t work if creditors are unwilling to negotiate
Stretching the repayment term might make you pay more as interests
Debt Consolidation – Combine multiple bills to make repayments easy
This form of debt solution can help you to merge your multiple debts together to form an affordable payment plan. As a result, your debt repayments seem easy, since you'll need to pay only once a month for your outstanding obligations. Once you enroll into a debt consolidation program, the counselors associated with the company also try to lower your interest rates, waive off the penalties, to make your payment plan more reasonable. Know how consolidation can help you and what can be its disadvantages:
Combines multiple bills together and reduces hassle
Arranges single affordable payments in a month
Negotiation through consolidation programs can reduce payments and eliminate extra charges
Interests can be reduced with credit card balance transfer or consolidation loan, if you do-it-yourself
Can't serve its purpose if you keep on incurring new debts
Minimum payments may extend repayment time-period and be expensive in the long run.
Debt Settlement – Pay less than what you owe
Settling your debts might be an extremely beneficial option if you feel you won't be able to repay your debts in full. A settlement program involves intensive negotiation with the creditors and collection agencies. As a result, not only the interests, penalties, extra charges get reduced or eliminated, but the debt principal can also be scaled down. It's a legal debt solution and is popular among debtors too, since it reduces debt amount significantly. Have a look below to understand some benefits and limitations of this option.
Brings substantial reduction to debt amounts
Can help to eliminate the extra charges like penalties, late fees etc
Can help to avoid collection attempts and calls
Can let you dodge bankruptcy
Taxes are imposed on the forgiven amount
Credit scores may drop since debts aren't paid in full
Bankruptcy – The ultimate debt relief solution
Bankruptcy is the only alternative left to you when all other debt solution services fail to work for you. The process follows the federal Bankruptcy Code and allows a debtor to discharge or reorganize his debts with a payment plan. Though there are several bankruptcy options, two of them finds most use when individuals file their personal bankruptcy cases. While Chapter 7 involves the liquidation of debts and can help you to get rid of the unsecured debts, Chapter 13 readjusts individual debt amounts so that they can be repaid, as much as possible. Find out about the benefits offered by the bankruptcy process and why it's the ultimate option.
Can let you get rid of all your unsecured debts
Can help you to avoid or postpone a foreclosure
Can give you a fresh financial start
Credit scores take immediate plunge
May affect future financial decisions for a considerable time period
Professional companies usually don't offer free debt solutions services, and may charge you for the assistance they provide. Moreover, all of the above mentioned debt solutions might not be appropriate for you. So, you need to do your own research and analyze your financial condition before choosing the one which suits you best.
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Date: 09:07 pm 9th Jan, 2014
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The debt settlement program typically lasts between 6 months to 4 years time.
At least 30% of the debt amount per creditor needs to be accumulated in the trust account for OVLG to give the creditor any settlement offer.
Not all creditors or debt collectors will accept a reduction in the balance, interest rate, or fees a customer owes such creditor or debt collector.
Pending completion of the represented debt-relief services, the customer's creditors or debt collectors may pursue collection efforts, including initiation of lawsuits.
That the use of the debt-relief service will likely adversely affect the consumer's creditworthiness, may result in consumers being sued by their creditors, and may increase the amount owed to creditors as a result of the accrual of additional fees and interest;
Savings a customer realizes from use of a debt-relief service may be taxable income.
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