Know Your Options
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Debt is a problem for many Americans and increasingly it is becoming a major problem for the entire U.S. economy. As the need to find the right solutions continue to rise, consumers are inundated with a wide variety of debt relief solutions. Some of the debt relief offers are valid while others are either true good to be true or simply designed to take advantage of the already vulnerable debtor.
Navigating through the myriad of debt solution peddlers can be very overwhelming and confusing for the average consumer. Separating the good service provider from the snake oil salesman can be a very daunting task.Debt relief solutions include:
The most viable solution to getting out of debt is to obtain some extra income and pay-off the debt as soon as possible. This option, however, is not feasible for many consumers. Paying the minimum amount due is not recommended if the plan is get out of debt, since all the consumer is doing is paying for part of the interest.
Ignoring or avoiding the debt can be the worst thing that a debtor can do. This action not only drastically affects his or her credit rating but also opens the debtor to potential legal action which can result into liens, levies or wage garnishments.
Each debt relief solution have their own advantages and disadvantages to the consumer.
The most important advantage in filing for bankruptcy is that debtors may obtain a fresh financial start. Consumers who are eligible for Chapter 7 may be forgiven (discharged from) most unsecured debts. Some of the disadvantages of bankruptcy is that it not only stays on your credit report for up to ten years, it also becomes a public record. Obtaining some loans or mortgage may become very difficult and can affect one’s ability to obtain a job. Also, the court fees and the cost of a lawyer can be very expensive.
A debt consolidation loan enables a debtor to create a workable budget, get control of their finances and make debt payments more manageable. This, however can be a very risky prospect for most debtors as a debt consolidation loan typically requires a collateral, such as home equity. This results into turning an unsecured debt, such as a credit card debt into a secured one. Lack of discipline, which has put the debtor in their original predicament to begin with has now put their own property at risk.
The benefits you can expect to receive through credit counseling are that they have prearranged figures with creditors to reduce your interest rate and minimum payments. Credit counseling, however, forces the consumer to stay within a stringent payment program, if the consumer fails to pay on time the arrangement is cancelled and debtor is placed in the same predicament. In addition, credit counseling typically simply negotiate lowering the interest rate, but the debtor is still required to pay the entire principal of the debt.
Debt Negotiation, also known as debt settlement, negotiates a debtor’s debt to a small percentage of the original amount owed. This program potentially allows the consumer to significantly lower their debt payments without having to file for bankruptcy. Some of the disadvantages of this program include a very negative effect on the consumers credit rating and some debt settlement companies charge very high service and maintenance fees.
DebtValley was established to provide consumers with complete and unbiased information and resources to debtors by aggregating information from all sources including consumers, industry experts and insiders. Via the information and resources provided, DebtValley hopes to provide the debtor with the necessary tools to make an intelligent decision on how to finally effectively manage their debt and finally live life debt free.
