Debt Settlement & Your Other Options
Our current economic recession has many individuals and families struggling to meet their monthly bills.
There are several choices that can be made in the quest to reduce debt, depending on your personal finances. We have listed most of the available choices below and described some of the advantages & disadvantages associated with each.
Financial Relief Experts is a Debt Settlement Company with experienced debt arbitrators who work closely with you to negotiate reduced debt settlements with your non-secured debt holders. In cases where payments on non-secured consumer debt such as credit cards, medical bills and store shopping cards have become difficult, there is a good chance we can help.
Debt Settlement
Debt
Negotiation & Settlement
has become the top method for many consumers to find debt relief.
Debt Settlement is based on consumer debt reduction through professional debt negotiation with each individual creditor or debt holder. This is the most effective debt solution because its focused on reduction of debt from the start.
This method of debt resolution tends to have the least negative impact on credit ratings than most other methods if you are already behind on your payments or if you are truly in danger of falling behind.
By reducing the total amount owed, you may:
- Reduce total unsecured debt by as much as 50-70% in many cases
- Reduce total interest paid
- Dramatically reduce monthly payments
- Realize debt freedom much quicker than other methods
You will save money on a monthly basis and in the long term. This program allows you to realize an end, instead of just trying to hang on every month. Individual results vary according to personal financial positions.
The best thing you can do is to be proactive and do something about your debt now. Do not wait until it is too late. It takes a lot of courage to reach out, but you are at the right place now. Contact us today for a free no obligation consultation.
Debt Consolidation
Debt Consolidation requires that a debtor refinance their existing debt under a new loan. In most cases monthly payments will be lower but total debt is not reduced.
As a general rule refinancing your home should not be considered. You would be securing unsecured debt to your most valuable possession, your home. This has caused a lot of problems around the country for people in mortgages. Also, understand if your interest rate on your mortgage is 6.5% and your credit card is at 18% that does not mean you are saving money. Your mortgage is amortized and you will be paying mostly interest for a long period of time.
Its very rare a bank will give you an unsecured loan to assist you with unsecured debt, especially in our current economic environment where consumer credit has dried up and lending practices have tightened. Even if you could qualify you would just be delaying the problem by moving the debt and still negatively impacting your credit.
Consumer Credit Counseling
This is where they take your debt and possibly reduce your interest rates some. Consumer Credit Counseling Companies are generally funded by the credit card companies themselves and tend to be just another form of a "collection agency".
Most of the time it will take you 5-10 years to pay off the full debt principle, large interest fees and additional monthly contributions to have someone else pay your bills for you.
There are few advantages on the Credit Counseling path because they typically do not offer debt reduction in the plan while negatively impacting your credit rating.
Bankruptcy
The bankruptcy laws have changed, it has become a much more difficult
and a lot less useful for consumers to get rid of their debt by filing
bankruptcy. Most people in financial "Straits" only consider this option
because they do not know what else to do.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, made it much more difficult for consumers to discharge debt. With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course.
The new bankruptcy laws in 2005 have made it much harder to for the consumer to file chapter 7. A Chapter 13 Bankruptcy trustee will decide how much debt is repaid and what the payments will be.
Bankruptcy can negatively effect your credit rating for 7-10 years and may result in higher interest rates on future loans. It can even make it more difficult to land a job.
Bankruptcy is usually considered a last resort, and people usually try to avoid it if at all possible.
Do Nothing
Keep Paying your Minimum Payments
If you keep paying minimum payments, your debt may never be paid off and even though you may be on time, a huge portion of your credit is being affected. Your debt to income ratio will not improve if you do not get rid of the debt.
Banks also have the right to raise your interest rates and minimum payments and or reduce your credit line at anytime and they will. Most of the money goes towards interest, and waiting for something to happen usually just delays the inevitable.