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Options For Dealing With Debt

Debt Settlement: Debt Help Lawyers negotiate settlements for less than the full balance.

Of the several options for dealing with debt, debt settlement with the services of a debt settlement attorney is often the quickest and most effective way to become debt free and regain financial freedom once again.

With the excessive interest rates being charged by most financial institutions, you will be paying your existing creditors for many years to come if you pay minimum credit card balances only. But most creditors will agree to accept less than full balance to settle outstanding debts, at least in certain situations and if handled correctly. Debt Help Lawyers may be able to negotiate down your high unsecured debt balances and get your debt settled for less than the full balance. And unlike non-attorney debt settlement companies, Debt Help Lawyers can stop harassing debt collectors and enforce your Fair Debt Rights. Contacting a Debt Help Lawyer today to see if you are eligible for debt settlement may be the first step to avoiding bankruptcy and the stress and aggravation of debt and getting back your peace of mind.

Debt settlement is a legal process of debt reduction in which the creditor and debtor agree on a reduced balance that, once settled, will be regarded as settlement in full. When a debtor is unable to make the minimum monthly payments on an unsecured debt such as credit card debt or medical bills, balances continue to grow due to ongoing interest and late fees. In order to stop this cycle of ever-increasing debt, negotiations between the debtor and the creditor can result in a reduced balance that the debtor can realistically pay off with regular payments. Debt settlements can lower consumers debt balances dramatically and save debtors from the stigma of bankruptcy. The creditor, who risks losing all monies owed if bankruptcy is filed, still regains part of the debt.

Settling Debt can truly be a winning solution all around by avoiding bankruptcy, stopping creditor harassment, satisfying your debts and saving money!

Other Options for Dealing with Debt

1. Bankruptcy. Consumers owing a large amount of credit card debt may see bankruptcy as their only debt relief alternative. And though bankruptcy may appear to be the easiest solution to eliminating outstanding debt, it also carries with it the most severe ramifications: it can appear on your credit report for up to 10 years, and is a matter of public record for anyone that wants to know. In addition, recent changes in bankruptcy laws have made it more difficult to eliminate debts through bankruptcy. And unless you get a complete discharge under chapter 7, bankruptcy requires a court-appointed trustee to control and oversee your estate, dictating how you pay back your creditors.

Bankruptcy can be avoided, and your debt problems may be solvable in significantly less than the time a bankruptcy would stay on their record. Thus though bankruptcy rightfully remains the final tool of financial wellness, it is truly an option best exercised with caution, and as a last resort for debt relief.

2. Consumer Credit Counseling Service. “Credit counseling” companies are generally set up and funded by the credit card companies. These companies do not settle debt, but rather make payments to your existing creditors through funds which you furnish them. In order to complete these programs, your creditors need to be paid in full — no accounts are settled and no savings are realized. Given credit counseling companies are compensated by the creditors, you have to wonder whose interests they have at heart.

Still, credit counseling companies can lower the interest being charged and can save you some interest money on your high interest credit cards. You make one monthly payment to the consumer credit counseling agency, then they disburse your funds and pay each of your creditors for you. It is important to understand, though, that you will pay the full balance owed on your various accounts with interest. In other words, your creditors will not be forgiving any of the remaining balance that you still owe. Further, when working with one of these companies, any debt that they help you with will show as TPA (third party assistance) on your credit report.

3. Debt Consolidation Loan.

Debt consolidation does not eliminate debt, but instead is simply a way of borrowing additional funds to pay off your existing creditors. Consolidation assumes you have the ability to secure a loan through a financial institution. Its aim is to get you a lower interest rate, secure a fixed interest rate or for the convenience of simply making one payment instead of many. Unfortunately, consolidation usually takes a much longer period of time to satisfy your debts.

A consolidation program can also severely affect the ability to discharge debts in bankruptcy. And though a consolidation loan might have a lower interest rate than the rates you are currently being charged by your current creditors, very often debt consolidation loans are secured with property and you ultimately could find yourself facing the possibility of losing your home. Consolidation is in no manner similar to debt settlement!

4. Loan modification  allows the debtor to renegotiate the terms of a loan with the intent of reducing his or her monthly payments.

5. Short Sale is a process in which the debtor and creditor agree to a loss on a real estate sale, discharges the debtor from a large portion of his mortgage but does not guarantee a full discharge of all debts.

6. Do Nothing. Do nothing, is exactly as it sounds. For most people this is not a practical solution, but technically it is an option. Unfortunately even if you are doing nothing, your creditors will definitely not do the same. This course of action may result in lawsuits, repossession, and a lot of stress. Ignoring your debts will never make them disappear, but it will most likely cause you more grief in the short and long run.

An example where doing nothing might work for you would be if you were unemployed and had no assets a creditor could pursue. Essentially you would be “judgment proof” and your creditors would (at least temporarily) hit a roadblock. However, this does not mean that they can’t come after you at a later date…when you least expect it.