subject: Choosing A Debt Elimination Program [print this page] Many people are suffering from the stress of debt. There are many reasons people have debt and it may be due to circumstance beyond your control. The only thing you can do is begin the repayment process when you get back on your feet. If you have debt due to out-of-control spending, you may need the help of a counselor or support group to get to the root of why you overspend. Sometimes just taking stock of where you are where you will be if you keep spending is enough to make an individual change the way they manage their money.
Credit counseling should be your first consideration. It is credit friendly and allows you to repay your credit card balances in full by consolidating them without a loan. Having to make only one payment can relieve a lot of the stress of trying to remember the amounts and due dates of multiple payments. The credit counseling company and the lenders agree to reduce your interest rates significantly to allow you to pay your balances off more quickly. A 2% payment is normally what is required in this program. Completion of this program usually takes 3 to 5 years.
Debt settlement is another option, but this is not credit friendly and should be done directly with the lender. Debt settlement is a negotiation process with the lender that reduces the balance that is owed on your account. It is usually in the range of 40 to 60 percent, but I have seen lenders that accept even less than that as settlement in full. Debt settlement companies should be avoided. They have high fees and they are performing a service that you can perform for yourself. You will be expected to pay income tax on the amount of money that is written off. This option can have you debt free in 12-36 months depending on your debt amount.
Debt consolidation loans should never be considered for debt elimination. Most people that could manage a loan effectively will not need one. And people that have gotten in to debt due to poor credit management are asking for trouble by consolidating their credit card debt with a loan.
Bankruptcy is something that no one likes to think about, but the experts say that if you owe more in unsecured debt than you make in year, it is an option you should give serious consideration to. The sooner you do it the sooner you can move past it.
Choosing a debt relief option will depend on the amount of debt you have, how current it is and capacity for repaying it. Starting with a credit counseling company is a good idea because if they cannot help you, they can advise as to what your next step should be. Get a quote from a credit counseling company today!
by: Marjorie Salada
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