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Credit counseling |
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Debt consolidation |
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Bankruptcy |
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Doing nothing (just make minimum payments) |
Credit Counseling
Credit counseling helps you get a lower interest rate on your debt, but it doesn’t reduce your total debt amount. So, if you start with $10,000 in debt, you might decrease your monthly payments, but you will still be paying interest on $10,000, vs. debt settlement, where you could reduce your debt by as much as 60% (and in some cases, even more). So, with debt settlement your $10,000 debt could be reduced to $4,000 AND your interest rate would be reduced enabling you to pay off your debt much sooner and with much lower monthly payments. If you choose credit counseling, you will make lower monthly payments than your current rate, but you will be making those payments for several years longer than if you choose debt settlement.
Debt Consolidation
The process of “debt consolidation” requires that you get a new loan to pay off all your high interest debt. Essentially you transfer your debt from multiple creditors, to one new creditor. The benefit is that you have one payment to make every month at a slightly lower interest rate.
However, debt consolidation loans can be difficult to get, especially if you are already having problems making your current payments. Debt consolidation only works if you own valuable assets, like a home or car, that the creditor can use to secure your debt. Be aware though, that if you are already having trouble making payments, and you secure your debt consolidation loan with your home, there is a very good chance that you will lose your home if you can’t make your payments!
Also, while debt consolidation loans may reduce your interest rate, you are still responsible for 100% of your debt. Debt settlement on the other hand reduces your debt, lowers your interest rate, and doesn’t require you to put your house or car up to do so.
Bankruptcy
Declaring bankruptcy to alleviate your debt problems is a very bad idea in almost every situation. While bankruptcy can generally wipe clean your debt problem, it creates several new problems – and that’s if you can even qualify to declare bankruptcy, which is very difficult. If you declare bankruptcy, you will not be able to receive credit for up to 7 years, and then you will have to re-establish your credit rating before you can get any type of affordable interest rate. At the same time, if you have any assets of value, like a home or car, your creditors can take ownership of them as soon as you declare bankruptcy.
Also, it is now very difficult to qualify to declare bankruptcy. If you have the capacity to pay your debts because of a job or savings, or if you have assets of value that can be sold to pay your debts, you will not be able to declare bankruptcy.
Debt settlement lets you keep your assets, has a short term affect on your credit rating, and makes paying off your debt very affordable without having to declare yourself bankrupt.
Do Nothing (just make minimum payments)
Doing nothing about your debt problem, or just making the minimum payments on your credit card balances, is probably the worst solution. Minimum payments only pay a very small amount of your principal debt balance – they primarily just cover the interest on your debt. This means that if you have high interest credit card debt, it can take several decades to pay it off! You may never get out from under your debt problem if you choose to continue down this path.
Debt settlement can reduce your total debt balance by a significant percentage (by as much as 60% or more), and provide you a lower interest. If you choose debt settlement, you could be out of debt in 12 to 36 months. If you choose to make just the minimum payments, it could take you 10, 20, 30 years, or even longer!
Make the smart choice – debt settlement. Call today for a free consultation with one of our debt specialists: 1-866-658-3935
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