Debtors stuck up in huge due amounts, find themselves in a real trouble. With constant calls from creditors and the pressure of collapsing finances, the plight gets worse. And the puzzled debtor fails to understand what he/she must do to get out of this setback.
But choosing an apt debt relief program can surely lessen your worries and help to manage your debts well. Debt relief programs not only take you out of the debt puddle, but also pave the way to a secured financial standing for you.
Kinds of Debt Relief Programs available
There are different kinds of debt relief programs available to assist you in your times of crises. Watch out for some of the most common programs below:
• Debt consolidation:
If you are running on numerous debts and making multiple monthly payments is getting a little difficult for you, then you may consider debt consolidation. Debt Consolidation enables you to combine all your debts into one secured loan that you need to pay off at a reduced rate of interest. Reduced interest rate and consolidation of many loans into one, actually allows you to pay off your debts comfortably within your budget.
• Debt Settlement/Negotiation:
Is the outstanding amount you owe is remarkably high for you to pay it off? But you are not keen on filing for bankruptcy. In that case, debt settlement would be the ideal solution to your problem. Debt settlement is a program in which the creditor agrees to accept a reduced sum of money from the debtor and that payment is regarded as payment in full. It requires the debtor to negotiate the settlement amount with the creditor. Effective negotiation can get your payable amount reduced even up to 60%.
If your finances are badly crippled with debts, and you are being totally unable to pay off your dues, then it would be best to file for bankruptcy. Once your bankruptcy appeal is granted, all of your assets shall be evaluated by the court. And thereafter the assets will be used to repay a portion of your outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor shall be debt-free and allowed to proceed towards a new financial standing.
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Pros and Cons of Debt Relief Programs
A suitable debt relief program is indeed a bright ray of hope when you feel you are lost in the darkness of debt. But it is equally important to know that debt programs do have an impact on your credit score. And this impact decides your financial credibility. The higher your debt gets, the lower goes your score along with your financial credibility. Debt relief programs, like bankruptcy affect your credit score too adversely. The poor score entailed by bankruptcy shows up on your credit report for 10 years. Even debt settlement and debt consolidation leave you with a bad credit score. But the best part is that, the score left by settlement and consolidation is definitely not as bad as that left by bankruptcy.
Solution to a bad credit score
The effect on credit score does not diminish the importance of debt relief programs. After all who wants get buried in huge debts? Having bad credit for sometime seems much more tolerable than carrying on with debts all your life! Moreover, much to your relief, there exist numerous credit repair programs to help you overcome the unpleasant consequences of bad credit score. Many of the debt management companies, besides offering debt relief services, also offer credit repair programs. Therefore, bad credit score is not really that big a problem!
Considering all these pros and cons, it is always advisable that you go for an appropriate debt relief program whenever you get entangled in debt-mess. And that would be a great start for a peaceful, debt-free and financially secured life!
This is a guest post by Kevin Craig.
Another debt relief option is Equifax Debt Wise. Equifax will help you pay your debts down faster while saving big bucks on interest.