The phone just rang. Let me look at the caller ID. Oh, no, I think it’s that credit card company calling again. I don’t know what to say. I just can’t pay anything right now. Is this a scenario you’ve experienced? Once you get into serious debt, things just seem to snowball. Before you know it you’re getting phone calls like the one described above or from collection agencies harassing you for payment.
You don’t need to feel bad?
You don’t need to feel shame if you’re deeply in debt. It happens to thousands of Americans. All those debts might not have even been your fault. You might have been involved in a horrendous auto accident or lost your job. You may now be “underemployed,” meaning that your earning just 60% of what you were making just a year ago. Or maybe your family has been hit by a series of huge medical bills.
No good news
While there is no good news about being deeply in debt, there is hope–there are at least three good ways to get out of debt. The first is what’s called a debt management plan (DMP). The way this works is that you go to a consumer credit counseling agency and sit down with one of its counselors. He or she will go over all of your finances, including your debts, and help you create a payment plan that can get you out of debt in five years or less. Your credit counselor will contact all of your creditors and explain that you have signed off on a debt management plan. He or she will work with your creditors to lower your interest rates, have waived any late fees or penalties and to get them accept the plan. Once everyone has signed off on the plan, your credit counselor will calculate a monthly payment. You will send it to the consumer credit counseling agency and it will then pay all of your creditors.
The pros of a debt management plan
I’ve already mentioned several of the pros of a debt management plan, which is that you will get lower interest rates and have any late fees or penalties waived. In addition, you will have just one monthly payment and your accounts will be re-aged to bring them current.
Interest rate arbitration
This is a very simple strategy for paying off your debts. You simply get a new secured or unsecured loan with a lower interest rate and use it to pay off your unsecured debts that have higher interest rates. The pros of interest rate arbitration are that your interest rates are reduced, you will have lower monthly payments (due to the reduced interest rates) and you should see a gradual rise in your credit score.
Chapter 13 bankruptcy
When most people think about filing for bankruptcy they think about a chapter 7. This will definitely get rid of your unsecured debts but comes at a high price–that it will have an adverse effect on your credit reports and credit scores for probably 10 years. In comparison, a chapter 13 bankruptcy does not discharge your unsecured debts. It gives you a period of three to five years to either pay off all or most of your debts under a court’s supervision. Unlike a Chapter 7 bankruptcy, this type of bankruptcy allows you to keep your personal and real property and have a regular source of income. This is why it is sometimes known as the “wage earners plan.”
Other advantages of a chapter 13
A chapter 13 bankruptcy has several other important pros. The payments you make on your debts are fixed with no interest and in many cases, you will be able to also lower the amount of the principal you owe. Creditors cannot sue you so long as you are making payments on your chapter 13 plan and in some cases, you will be able cram down second mortgages, which would allow you to keep your home.
Why choose professional debt settlement
The three ways to pay off your debts described above have one thing in common–none can actually get your debts reduced. They are just ways to better manage it. You can get your debt reduced and save thousands of dollars through credit card debt settlement. We have years of experience settling debts for our customers that have gotten them debt-free in 24 to 48 months. You can get more information on debt settlement by filling out the free debt analysis form with no obligation.
National Debt Relief helps people nationwide resolve $10k or more in unsecured debt. Our debt coaches negotiate with creditors on your behalf so that you pay a fraction of what you owe and can become debt free in as little as 24-48 months.
