If you find yourself in debt which you are having difficult repaying debt consolidation can be the answer. But how can this be a solution to your problems?
Debt consolidation is a good choice if you have multiple debts which you are unable to manage and are making several different payments every month. This program replaces these multiple payments with one easy and more affordable monthly bill, and makes the repayment process much easier and faster. By managing debts through a debt consolidation program you will pay less each month and save money. For more information on debt consolidation visit http://thedebtreliefsreviews.com/.
Debt consolidation however is just one solution of paying off debt and establishing a solid financial footing. Other methods to consider are:
Interest rate arbitration– this is where you obtain a secured or unsecured loan at a low interest rate to pay off any existing unsecured higher interest debt. This helps manage debt as interest rates and monthly payments are reduced. The advantages of this are:
- Interest rate reduction
- Lower monthly payments
- Gradual increase in your credit score
Debt management plan– this involves receiving debt counselling and debt advice from credit counselling organisations, including how to plan your budget and arrange a plan with your creditors to lower your interest rates. The advantages of this are:
- Lower interest rates
- Elimination of late penalties and fees
- One easy monthly payment
- Bring accounts current if you’ve fallen behind
- Debt payoff time of no more than 5 years.
Debt settlement– here the settlement company consults with you about your financial and personal goals. They can create a trust account in your name and negotiate with your creditors to settle some or all of your debt for less than what you owe. The advantages of this option are:
- Lower payoff amount
- Quickly out of debt
Chapter 13 bankruptcy– here you can arrange full or partial payment of your debts in a period of 3 to 5 years under supervision of the court. This is also known as a wage-earner’s plan as it can help those who want to keep their personal and real property and have a regular income. The advantages of this solution are:
- Payments are fixed with no interest
- Principal amount is reduced in many instances
- Creditors cannot sue you while you are making payments on your chapter 13 plan.
- No need to sell assets and property
Chapter 7 bankruptcy– this is where non-exempt assets are sold by a court-appointed trustee. Proceeds from this sale are used to pay off debts. Debts can be discharged within 4-6 months. The advantages of this are:
- Your unsecured debts are discharged
- Liens, bank account levy and garnishments are stopped
- Creditors cannot sue you after debts are discharged
- Several types of retirement accounts can be protected from creditors
- You can often reaffirm secured debts such as a mortgage or car loan.