If you have debt you need to deal with you are going to wind up looking at debt relief programs to deal with the problem.
But there isn’t just one type of debt relief program out there. There are a few fundamental ways to deal with your debt but a thousand fringe ways.
Let’s take a look at the major approaches to deal with money problems.
Bankruptcy – Most people who file bankruptcy turn to Chapter 7 bankruptcy which will eliminate your unsecured debt in about 90 days. It is the least expensive way to make your debt go away. Following a Chapter 7 bankruptcy, you can immediately begin to rebuild your credit. You’ll also be able to get a security clearance, new job, and have access to credit again.
Another form of bankruptcy is a Chapter 13. In this form, you will enter a repayment plan that will last for three to five years. At the end of the time, any remaining debt is eliminated.
Bankruptcy has the power of the law behind it, and your creditors have to accept the court ruling.
Debt Settlement – It may be possible for you to agree with a creditor so you can pay part of what you owe and the rest will be forgiven. But when the debt is forgiven it may leave you with an income tax bill, and that part of the debt you don’t pay shows up as a bad debt on your credit report. It is reported for seven years from the time it last went delinquent.
Creditors don’t have to agree to accept less than you owe to settle a debt. If only some of your creditors decide to deal with your debt through settlement, you are not getting the fresh start you need to move forward.
Credit Counseling – Non-profit credit counselors can get your interest rates reduced on your credit card accounts. You will then make one payment to the credit counseling company which will cut up the payment and forward it to your creditors. There is no standard reduction of interest rates when in a credit counseling program. When repaying your debt this way it can take you years and years to payments.
Let’s Compare Debt Relief Programs
If you use my online debt relief calculator you can look at the advantages and disadvantages of each significant debt relief program.
What you need to avoid are magical sales pitches by commissioned salespeople who care less about really helping you and more about selling their product to you.