Let us once again review what we have learned about debt relief options.
I would like to preface this with; you are not alone in your struggle with debt. Almost everyone in the United States is in the same boat as you. The purpose of this series of articles was not to get consumers to dodge their debt obligations and screw the credit card giants. The focus of these articles was for the person in hardship, the person looking for a legitimate debt relief program and is reviewing the options.
The five options for debt relief are:
1. Consumer Credit Counseling is a debt advice "charity", and is funded entirely by the credit industry, which creates a conflict of interest and gives the creditor the incentive to make you pay more.
2. Debt Settlement or Debt Negotiation is an agreement between a debtor and a creditor to fully satisfy a debt for a reduced payoff amount. A debt settlement is usually reached when a debtor is unable to fully meet their debt obligations due to financial hardships
3. Consolidation loans are secured loans. If you did not pay an unsecured credit card loan, it would give you a bad rating but your home would still be secure. If you do not pay a secured loan, they will take away whatever secured the loan. In most cases, this is your home.
4. Bankruptcy. Chapter 7 bankruptcy is the liquidation variety where property is sold (liquidated) to pay off as much of your debt as possible, while leaving you with sufficient property to make a fresh start. Chapter 13 is the most common type of "reorganization" bankruptcy for consumers where you repay your debts over a period of years. Both kinds of bankruptcy have numerous rules, and exceptions to those rules, about what kinds of debts are covered, who can file, and what property you can and can not keep.
5. Do Nothing! Rather than doing nothing about your debt, explore the other options and see which one best fits your situation and makes the most sense to you.
Of these five options, each has their own characteristics, as well as pros and cons. I feel that they were all properly addressed in a non-biased manner through this series. There is no debt relief program that will magically change you financial situation overnight. Let's face it, these problems did not develop overnight and will take time to resolve.
So if a consumer is suffering some financial hardship, these are some of the characteristics that one might be looking for in a debt relief program:
1. A program that will get you out of debt in the quickest possible time. Of the options outlined above, this would be debt settlement. A typical debt settlement program will have the client debt free in an average of three years. Compared to CCC (5 – 7 years) Bankruptcy (7 years)
2. A program that will get you out of debt for the lowest cost. Again, debt settlement scores the best, reducing a client's debt burden between 40 and 60%
3. A program that has minimal damage to your credit report. Debt settlement wins here too. Let's face it, if your seeking debt relief options, your credit probably is not that hot to begin with, but you are doing some damage control and do not want to further bury yourself. It is obvious what bankruptcy will do to your credit and the CCCs is generally referred to as bankruptcy's brother. With debt settlement, your credit will be while you're in the program but upon completion, your accounts will reflect "paid as agreed" (remember average 3 years). Then you can take the proper steps for credit restoration.
When looking at your options for debt relief programs, doing you due diligence is vital. You need to choose a program that will fit your individual needs. Getting you out of debt in the shortest possible time, for the lowest possible cost and doing the least damage to your credit report.
The answer here is obvious.