Debt Consolidation Loan
While debt consolidation is certainly an option, be very careful before entering into a legal binding agreement with a potential creditor. You see, the interest rate may be extremely high, depending on your credit score and the amount of debt you owe. Also, keep in mind that you will still be in debt; you’ll just owe the money to a different source. Debt consolidation is a good option for some individuals, but – like most forms of debt relief – debt consolidation is not for everyone.
Consumer Credit Counseling
Many consumer credit counseling agencies are nonprofit organizations that are funded by contributions made by creditors. These agencies can usually negotiate with your creditors to get an interest rate reduction, but you will still owe the entire balance on your accounts. Once you agree to have the credit counseling service represent you, you’ll make a single monthly payment to the consumer credit counseling service. These funds will then be distributed to your various creditors. Depending on the amount of debt you owe and the amount of the monthly payment you make, this could take several years.
Missing one month’s payment may get you removed from the program by your credit card companies. If this happens, many creditors won’t allow you to re-apply for a hardship program for a year or more. While this is a good option for some people, nearly 75% of people who enroll in a credit counseling program fail to successfully complete it.
Some individuals simply don’t have a choice, but most people resort to bankruptcy in only the most severe cases because even considering this option can be scary. A bankruptcy filing can remain on one’s credit report for up to ten years; this is why many people look at bankruptcy alternatives. Also, since October 2005 the new bankruptcy law went into effect and the landscape has changed for those who are considering bankruptcy. Some filers with higher incomes won’t be allowed to file Chapter 7, but will instead have to repay at least some of their debt under Chapter 13. All debtors will be required to get credit counseling before they can file a bankruptcy case. Additional counseling on budgeting and debt management may also be required before their debts can be wiped out.
If you’re like most people, you probably won’t be choosing this form of debt relief because it’s simply not a debt relief option. You see, if you’re employed or have any assets there’s nothing to prevent a creditor from pursuing legal action. Unfortunately, this could result in a judgment being filed against you. A judgment may mean you’ll face garnishment of wages and/or seizing funds from your personal bank account. If, however, you are not employed and have no assets you’re “judgment proof” and really have nothing to lose. But, if your situation changes at some point in the future, your creditors will likely continue their harassment. Also, you’ll have a tough time getting credit for a car or a home as long as you have open balances on your credit report.
Credit Card Debt settlement, if handled properly is a program where most creditors will agree to accept less than the full balance owed. In most of these cases, consumers have saved thousands of dollars, helping them become debt free in a fraction of the time they otherwise would have. This has proven to be an excellent solution for many people and may be all you really need in order to get back on your feet again. The key to successfully eliminating your debt through this form of debt relief is finding an honest debt settlement company.
Donaldson Williams, Inc. has assisted many people and we’ll be more than happy to talk with you further about the options that may be available to you. Please keep in mind that by contacting our office you will not be faced with a pushy salesman; you’ll simply receive the absolute truth regarding your own personal situation. Feel free to either give us a call, send an e-mail or complete our Consultation Request Form to speak with us about your financial circumstances. You’ll be pleasantly surprised by the helpful, compassionate and genuinely truthful answers you’ll receive when you and I speak.