When You Need to Look for a Debt Relief Option
You must keep in mind that debt relief actually don’t happen overnight. Certainly, this is one long process and this isn’t pain-free as well. Your first choice should be changing the spending habits for you to be able to repay the debts that you have.
When you think that you are able to repay the unsecured debt in 5 years, then you have to do this. Make sure that you contact those creditors for restructuring the budget, debt consolidation or other repayment plans. However, when you have exhausted the many options for repayment and you don’t have any hope of repaying that unsecured debt in such foreseeable future, then you should go for bankruptcy. You must choose this if the whole balance of the unpaid debt is equals half the income. However, when there isn’t hope in these solutions, then there are other options.
You may go for credit counseling now. Credit Card Act of 2009 is requiring the different credit card companies to provide a toll-free number for the customers needing credit counseling assistance. These credit counseling agencies will check your debt and the income and provide you with the debt management plan or debt consolidation. There are some organizations having agreements with the creditors to minimize the interest rate on the debts. They would work to help you choose that solution that works great for your budget. However, you don’t need to always agree to the plan. You can take the suggestions and the advice of the counselor and simply try such all by yourself.
Such credit consolidation is a solution which the credit counselor will suggest. You will be asked to take a loan on this to settle the unsecured debt. The objective of this would be keep a loan the loan or debt with the lowest interest rate instead of having different debts. Thus, instead of paying different creditors each month, you will only have to pay one now.
Another option that is recommended by the credit counselors is the debt management. It is the goal of this to get rid of the debt by reducing such interest rate and fees. You should get a lower monthly payment that you are able to manage with this. Such debt management programs are really organized and would keep the credit score intact.
Also, there is the debt settlement program which is one popular option because the lender would agree to accept less than the amount you owe. You should pay one lump sum in order to settle the unsecured debt. There is no need for you to get a loan.
Of the many debt relief programs, you must keep in mind that the most damaging is bankruptcy. You may get financial relief from such but there can be serious consequences. It would be best that you research more and also obtain more info on the consequences of this option.
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