Debt Relief Options

Before making any financial decision, know your options.  There are many ways to tackle debt and what is best for you may not be what is best for someone else.  Decisions about your finances should be well thought out.  The last thing you want is to make your current situation worse.

For more information see The Four Worst Things You Can Do For Your Credit.

1. Debt Settlement  - Debt settlement, also referred to as debt negotiation, is when a third-party agency (like us) negotiates down the amount owed to a lower sum.
   Cost: Usually 15% of your debt.
   
   
2. Debt Consolidation - Debt consolidation is a loan.  The loan proceeds are used to pay your creditors and you repay the loan to a debt consolidation agency.  This option works best if you qualify for a loan high enough to cover your debts and those debts have high interest rates.
   Cost: The interest paid on the new consolidation loan.
   
   
3. Home Equity Loan - A home equity loan falls under the category of consolidation.  You borrow money as a secured loan against your home, using the equity of your house.  These loans are usually adjustable interest rates and you must qualify for the loan.  Today, most lenders require a very high credit score and a strong equity position in your home.
   Cost: The interest rate plus lender fees.
   
   
4. Credit Card Balance Transfer - A credit card balance transfer is another option similar to consolidation. You transfer your balances from other credit cards to a single, usually new, credit card.  Often you can get 0% interest as an introductory offer, but after a short period you will pay high credit card interest rates.
   Cost: Any interest you have to pay on the new credit card and annual fees, if applicable.
   
   
5. Debt Counseling - Debt counselors reorganize your payment plans and give you a longer amortization period allowing for smaller monthly payments.  Once completed, lenders often consider these programs similar to bankruptcy and you may have a more difficult time re-establishing new credit.
   Cost: Usually a one-time enrollment fee into the counseling program plus a monthly fee .
   
   
6. Do-It-Yourself - If your debt is manageable, you may want to approach it the old fashioned way and pay off all the balances.   In order to accomplish this, you must follow a strict payment schedule and if you pay the minimum payments you will make those payments for an extended time period.
   Cost: The interest you pay before deciding that you need help.
   
   
7. Bankruptcy - Bankruptcy is usually the very last option someone chooses.  Bankruptcy laws have changed and are more restrictive than in the past.  Once completed, most have a long and difficult path to re-establishing their credit.  Bankruptcies remain on your credit report for up to 10 years.
   Cost: $5,000.00 average per bankruptcy filing