You’re finally ready to admit it. You’re in serious trouble financially. You made the mistake of thinking each month that you could make things better or that it was okay because you were making at least the minimum payments on your credit cards.
But you just can’t deny the facts any longer. You now owe $9,000 that you have absolutely no way of repaying any time in the foreseeable future.
Four options for managing your debt
There are four good options for managing that debt. First, you can go to a consumer credit counseling service. Many of these agencies provide their services free. If you choose this option, a credit counselor will help you develop a payment plan and then “sell” it to your creditors. With some agencies, you will send it a check each month. The agency will then distribute money to your creditors based on the payment plan they accepted.
Second, there is a strategy whereby you transfer all of your credit card debt to a zero balance transfer credit card. This will do nothing to reduce your debt but will give you a “timeout” of six to 18 months during which time you will not have to make any payments and might be able to take some other steps for getting your debt under control.
A third way to handle your debt is to pay off everything you owe with a debt consolidation loan. If you have equity in your house or some other valuable asset you could use as collateral, you could get a low interest secured debt consolidation loan. If not, you would need to apply for an unsecured debt consolidation loan.
The fourth and possibly the best option
Many families have found that the best way to handle debt is via debt negotiation. This is where you or a professional debt negotiation company negotiates with your creditors to slash the amount you owe.
The benefits of debt negotiation
If you owe $7,500 or more in unsecured debt, then debt negotiation could very well be your best option. The biggest benefit as noted above is that it’s the only way you can actually get your debt reduced. An experienced and professional debt negotiation company such as National Debt Relief can get your debt reduced by approximately 50% before fees, or 30% including our fees. The way this is done is that the company negotiates “final” settlements with your creditors, whereby they agree to take less money in order to be guaranteed that they will get at least half of what you owe. Most families that have chosen debt settlement have found themselves completely out of debt in 24 to 48 months.
Better than bankruptcy?
Debt negotiation can help get you out of financial trouble but will definitely have an effect on your credit rating. This is because you will have stopped making payments to your creditors for probably six months before they will be ready to settle. And this will definitely be reported to the credit bureaus, which will have a negative effect on your credit score. However, this will have less of an effect then filing for bankruptcy which will stay in your credit file for 7 to 10 years, during which time you may have a serious problem getting any new credit.
Debt settlement is not for everyone. But if you have had some kind of financial emergency that has made it impossible for you to make payments on your credit cards and other debts or that would keep you from making payments in the future, then debt settlement could be your very best option.