March 18th, 2008

3 Debt Relief Methods

Posted in Credit, Debt, Financial, General, Uncategorized

We here in U.S are on the edge of experiencing a major credit problem. The sum of unsecured debt has hit an all time high and we are approaching what may be a recession. Thus leaving a plethora American families with fewer dollars in there pockets and more bills to take care of. In this writing I will review the pros and cons of the diverse available methods of credit card debt relief.

Consumer Credit Counseling:

Pros- Monthly payments are consolidated into just one, lower APR, fixed payment not minimum payment.

Cons- Long term repayment, stringent program rules, low graduation rate, hard to obtain mortgage on program, payments are not very low, the creditors will kick you off the program if one payment is late or missed.

Bankruptcy:

Pros- Upon qualifying for Chapter 7 full amount of debt is discharged, avoid collection calls.

Cons- Long term negative effect on future credit, made a public record for the rest of the debtors life, change in bankruptcy law made Chapter 7 very hard to qualify for, court ordered repayment process.

 Debt Settlement :

Pros- Great savings on debt amount owed, by far quickest route of getting out of debt, not made a public record.

Cons- Short term negative effect on credit rating, collection calls, possibility of lawsuit.

 All of the above methods do have their respective pros and cons. However what really determines which system is proper for you really depend on the current monetary situation that you are in. For debtors stuck deep in debt but have money to pay a portion of it off then debt settlement would be best, to help avoid bankruptcy. Those who have smaller amounts of debt and have no problem making the monthly minimums plus more, than credit counseling is better. However there are some people out there who have literally no choice but to go into a bankruptcy proceeding.