A debt settlement plan is often the best alternative for people who are struggling financially and badly need assistance dealing with their mounting credit card debts. If you have a relatively lower monthly pay check, but large debts which can’t be handled through traditional means such as getting a second job, trimming other expenses or reducing your credit card debt to zero, then this kind of Credit Debt Relief plan may be right for you. It is generally accepted that when someone is in debt, they have no time to think about anything else other than paying off their debts. Many people fall into a vicious cycle of debt accumulation where they use their credit cards continuously, receiving high balances and low interest rates on their cards, and yet can barely afford to make the minimum payments or even be able to pay their bills. When it comes to a serious problem like bankruptcy, it’s usually better to seek immediate help from debt relief companies and work out a solution rather than waiting until it’s too late.
Debt settlement and debt relief work through different processes that will help you get out of debt and avoid bankruptcy. To start with, you may be offered a debt relief program which can include either debt consolidation or debt relief options. Under debt relief programs, you would hire a company or an individual to negotiate with your credit card companies on your behalf. These negotiations are done in order to lower the amount you owe, in some cases eliminating up to 70% of your debt.
Once you’ve reached this point, the company you hired will begin negotiating on your behalf. Often, they will also be able to eliminate any late fees, penalties and accumulated interest. This will allow you to pay down your total debt and start rebuilding your credit score, which will improve your chance of qualifying for a loan or mortgage in the future.
Another option offered by debt relief programs is a repayment plan. With this repayment plan, you will hire a third party to act as a co-signor on your behalf. The co-signer should act in your place if you cannot. This ensures that if the loan goes into default, the government will have the ability to compensate the third party for their services. This will often allow you to pay back your consolidation or settlement agreement in about five years.
If neither of these options work for you, there is another credit card debt relief option available. You may consider a do-it-yourself solution. One popular do-it-yourself solution is to file bankruptcy. Although this solution can save you from paying high interest rates on loans and eliminate some fees, it does have some drawbacks. First of all, bankruptcy will leave a permanent mark on your credit report. You won’t be able to apply for loans in the future; you will also lose any assets that are exempt from bankruptcy.
Another drawback of filing for bankruptcy is that you will not be able to negotiate with any of your creditors. This will mean that you will not get rid of high interest rates and other fees associated with your accounts. Another thing to note is that during the time you are going through a consolidation or settlement program, creditors will not be able to contact you. This is due to the fact that you are not officially filing bankruptcy. However, some creditors may still be able to get you a telephone call or an occasional letter.
If you decide to do a settlement or consolidation on your own, the process may take longer than it would if you went through a debt relief program. One reason for this is that you will have to spend more time researching all of the details involved in each program. Another reason is that you will likely need to hire a lawyer to help you with the legal aspects. A bankruptcy attorney, on the other hand, will work with your creditors to help them accept a settlement. They will also work to get your interest rates reduced, your fees eliminated and they can even work to get your creditor to forgive you some of your debts.
As you can see, using do-it-yourself debt relief programs to clear your name will not give you the type of results that you want. If you are thinking about filing for bankruptcy, you should seriously consider getting some professional help. You can clear your name today.