Compare Debt Relief Options
Debt Settlement is the fastest and leas expensive way to get out of debt without filing bankruptcy. During a debt settlement program professional debt negotiators work with your creditors to reduce your debt to a fraction of what you owe. Your debts are settled in an orderly manner as agreements are reached with each of your creditors. The program typically takes 12-36 months and is considered complete when all debts included in the program have been settled. Debt settlement will negatively affect your credit score, but so will most all of the other available options. What’s more important to you, worrying about your credit score or getting out of debt and getting your life back on track?
Credit counseling services generally maintain close relationships with credit card companies and other lenders. In some cases they are able to negotiate lower interest rates for their clients which will reduce debt to a certain extent. Compared to a debt settlement program, credit counseling generally takes longer (5 years or more) and does not deliver the same level of savings that can be expected from a quality debt settlement program.
Debt consolidation loans combine all of your existing payments into one new monthly payment. In some cases the overall interest rates may be reduced but you often end up with a longer payment term than you had to begin with. Debt consolidation loans can also increase your overall risk since in many cases your home is used as collateral for the new loan. Taking on new debt to pay off old debt is not a very effective path to a debt free life!
Paying the Monthly Minimums
Credit card companies make more money the longer you stay in debt. The minimum monthly payments they charge usually cover little more than interest charges. As a result a $10,000 balance on a typical credit card could take up to 22 years or more to pay off!!* If you choose to take this path you will end up paying more than $18,000 in interest charges alone which is more than the original balance. In comparison, that same $10,000 balance could be paid off in 3 years for a total of about $5,000 with a quality debt settlement plan.
Personal bankruptcy should be considered as a last resort to a debt management option because the outcomes are long-lasting and extensive. Since the new law went into affect, most people will qualify for a Chapter 13 bankruptcy which in most cases is a five year repayment plan to the creditors. A bankruptcy stays on your credit report for 10 years, affecting ones ability to obtain credit, buy a home, get life insurance, or even obtain a job.