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Debt Management Options
Consumer
Credit Counseling
Consumer credit counseling is a popular debt management option for individuals
who are seeking relief from their debt. It is a service that offers the
consumer counseling on how to work out a realistic debt repayment plan.
The goal is to ensure that debts are paid back over a period of time and
provides the debtor an option of making one payment to a consumer credit
counseling agency. At best, credit counseling programs have had mixed
results as these agencies do not negotiate with creditors to lower the
amount of debt, and as with a bankruptcy petition, your credit report
will most likely be affected.
Other common problems include late fees and penalties caused by the mismanagement of payments to creditors. Credit counseling agencies work for "Lenders," not the consumer, and sometimes the program takes years longer to complete than a debt settlement plan.
Debt Settlement
A Debt settlement program is a unique, cost-effective approach to becoming
debt free. Debt Settlement can help you to:
- Avoid Bankruptcy
- Avoid Creditor Harassment
- Get Out of Debt
- Lower Monthly Payments
Debt settlement is well recognized by the banks and your creditors as a way of getting out of debt due to a financial hardship. Debt settlement is when you make arrangements with your creditors to pay a fraction of what is owed to them so the debt is not written off as a bad debt or total loss. This is a way of satisfying your debts without going through the ruin of bankruptcy and get a new start towards re-establishing your credit.
Bankruptcy
Bankruptcy is a debt resolution alternative sometimes offered to consumers
who are seriously in debt. Bankruptcy involves the filing of a petition
with the bankruptcy court in order to obtain protection from creditors.
The choice to file bankruptcy may have more negative than positive effects
and is usually devastating to your credit. In addition to filing fees
and possible legal bills, bankruptcy can remain on your CREDIT PROFILE
for up to ten years and can affect future credit, housing and employment
applications. Bankruptcy is regarded as a poor choice and an irresponsible
alternative to eliminating debt.