Debt Relief Programs - Debt Consolidation and More

Did you know that nearly 60 percent of American families are more than $10,000 in debt? However, of the millions of families struggling with unmanageable debt, no two people have the exact same debt problems. Luckily, there is a wide array of debt relief programs available to fit the individual needs of those seeking assistance.

Debt Management

Many credit agencies will work with a consumer and help them sign up for credit counseling programs that require debtors to agree to certain terms in order to receive lower interest rates or extended loan terms. These programs stress the importance of budgeting and will combine your bills into one monthly payment if necessary.

Programs are typically designed to have the consumer debt free in 3-5 years but it can depend on the load of debt. Be wary of companies run by creditors as their main objective is collecting as much of the debt as possible. Even nonprofit organizations are guilty of having profits go to major credit card companies.

Debt Settlement

This option is best for those who have a considerable amount of debt (approximately $10,000 or more) or are on the verge of bankruptcy and want to take a more aggressive approach to becoming debt free. A debt settlement is an individualized agreement between the debtor and the creditor that includes a substantial decrease in the amount of the total debt that is owed in exchange for a lump sum or higher monthly payments.

Creditors will make deals like this because it is more beneficial to them to recoup some of the money rather than forcing the consumer into bankruptcy and receiving nothing. Only experienced negotiators should consider these tactics or hire a debt settlement firm to handle it for you.

Debt Consolidation Loans

Debt consolidation loans involve rolling several smaller loans into one large, comprehensive loan. These smaller loans could include student loans, car loans or credit card debt. Debtors benefit from only having one payment to worry about every month and an improved credit score from paying off multiple debtors.

However, loan sharks will often charge exorbitant rates for even a small personal loan. Try working with banks you have a good history with to get a good rate or consider a second mortgage if you are a homeowner.

Filing Chapter 7 Bankruptcy

This should only be considered as a last resort for those who are simply unable to pay their bills. Filing for bankruptcy typically stays on your credit report for at least ten years, making it virtually impossible to borrow money during that time period.

Most individuals who file for bankruptcy will say the long-term damage on their credit is not worth it.