A variety of debt relief solutions are available to you if you are having trouble with creditors. When the phone is ringing because you owe money and you don't know what to do next, consider these range of options.
This should be your first step in your search for debt relief assistance. Debt counselors, sometimes referred to as credit counselors, are professionals who are trained to help you solve your credit card problems.
They will help you create an action plan so you can move forward, and provide other related services that enable you to bring your outstanding balances under control.
Debt counselors help you negotiate with credit card companies for lower interest rates and reduced fees. They help you create a repayment plan.
They help you understand your finances and make a budget to guard against future financial problems. Plus, they help stop those harassing calls you receive from creditors.
Some counseling centers charge very little for their services; others may have mounting fees that accumulate over time.
Be sure you understand the cost of the service before proceeding. For more information on hiring a credit counselor, click here: Credit Card Debt Counseling
Debt consolidation most often means you take out a loan to pay off your credit cards and other bills at once, and then make a single monthly payment to the lending institution for the loan. This not only makes managing your payments easier, you may be able to reduce your financial obligation by securing a lower interest rate.
In addition to a loan, consolidation can work by moving all your credit card balances to a single card with a lower interest rate, enabling you to make just one payment and save some money. In addition, a credit counseling company can serve as the consolidator. In this case, you pay the company one check each month, and then it pays your multiple bills from that check.
Debt consolidation is a good option if you are ready to pay off your credit card balances without spending more money to add to the amount you already owe.
There are two types of debt consolidation loans: unsecured, which generally carry higher interest rates, and secured loans.
While secured loans offer lower interest rates, you must put up your car or home. If you default on the loan, then you will lose whatever the bank has secured.
Be aware that consolidation may negatively impact your credit rating, depending upon how much you are behind in payments and other concerns. Though, when you pay off debts and begin to consistently make regular, on-time payments, you can rebuilt your credit.
For more information on the pros and cons of consolidation strategies, click here: Consolidating Credit Card Debt.
Debt management is a service offered by a credit counseling agency that includes developing a repayment plan that the counseling agency handles your accounts for you. You send them a single monthly payment and they then pay your creditors with these funds.
While you are using this type of repayment plan, your creditors can still contact you. However, your counseling agency should negotiate with the companies on your behalf so that they are aware of the repayment schedule.
They should also work with the companies to lower interest rates. This should help stop the calls.
You will likely have to pay a fee to the agency handling your case. This fee will vary depending on the firm, but in many cases, there will be an initial flat fee plus a small monthly fee for handling your payment every month.
You should be aware of the fees and be very careful, as there are untrustworthy companies offering debt relief solutions that prey on people by charging high fees for these services. For about debt management, click here: Developing a Debt Management Plan
A debt settlement is a negotiation with the credit card company that is trying to collect its money from you. You can do this yourself, or have a reputable agency do it for you for a fee. When you negotiate a settlement, you speak with someone in the collections department and ask to reduce the amount you owe. In some cases, you can lower the amount you must pay by as much as 40 percent so that you are paying mostly the principle (the amount of the actual purchases).
This is a one of the debt relief solutions available that will damage your credit score. Your creditor will report the account as "settled" on your credit report, which affects your rating and ability to get a loan or credit card in the future. The settlement will stay on your record for seven years, so proceed carefully about using a debt settlement strategy.
If you go through an agency, be sure you understand the fees and terms. Additionally, you may need to see an accountant if the amount of debt the credit card forgives is significant. You may need to pay taxes on the amount forgiven.
If you think settlement is the best option among your debt relief solutions, learn as much as you can before proceeding. Also consider hiring a agency or attorney to help you. Click here for more information: Settling Credit Card Debt
If other debt relief solutions failed, you can consider bankruptcy. There are several different types of bankruptcies. While you can file bankruptcy yourself, it is advisable to have a lawyer.
However, filing bankruptcy should be your last step, not your first or second. You want to avoid bankruptcy if at all possible. For more about filing for bankruptcy, click here: Bankruptcy Information.
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