Debt Solutions

Anyone needing a solution to either reduce or eliminate their debt has a choice of different ways they can accomplish this.  This can be done through a debt settlement, debt consolidation or debt reduction.  

Debt settlement is offered by many companies and negotiations are handled by that company for you.  They will talk to your creditors and work out a plan whereby you are set up with affordable monthly payments based upon what you are able to pay each month.  They are usually able to get your debt reduced by 40% to 60%.  They become the go-between for you and your creditors.  You make one payment to this company and they, in turn, pay your creditors.  This stops the harassing phone calls you receive from your creditors and will help you avoid bankruptcy.  Generally, you will be debt free in approximately three years.  They can settle debt on credit cards, unsecured loans, unsecured personal loans, unsecured personal lines of credit, repossessions of automobiles and medical bills.  To be eligible for debt settlement, your unsecured debt must total between $10,000 - $20,000 and you have to be one to two months behind in your payments. 

It must be noted there are risks involved with debt settlements and thus, they should not be entered into unless the financial situation is severe.  Be aware that your credit rating will be severely damaged for years and you still may be sued.  Also, the interest on your credit accounts will continue to accrue until the debt is settled.  

Likewise, debt consolidation works in much the same way as debt settlement, except with debt consolidation you will receive a consolidation loan, which pays off all your creditors and leaves you with one loan to pay off at a reduced monthly payment.  This consolidation loan, in the long run, will usually cost you more in interest because the loan is spread out over a longer period of time.  This only serves to prolong the debt and the same financial risks stated above will apply.  

Many people use the equity in their home to get a debt consolidation loan and then use that money to pay off their creditors and have only one payment a month.  A consolidation loan is more or less like shuffling your debt around - the amount of your original debt remains the same, with the amount of equity you pulled out of your property added on, but your monthly payment does reduce.    

However, there are companies who are able to get your debt reduced without a consolidation loan.   In this instance, you don't need to own a home to consolidate your debt.  Debt consolidation companies do claim to be able to reduce your debt around 50% and lower your high interest rates by consolidating all your debt.  

Another idea is to consider transferring those high interest rate credit card balances to another credit card with lower interest rates.  We are all barraged almost daily with offers from credit card companies.  It is wise to look these over to see if they offer a balance transfer.  In many cases, these offers usually have what they call an 'introductory period'.  During this period, they offer 0% interest for a certain time limit, like six months to a year.  By transferring a balance from a high rate interest card to one only charging 0% for a specified period of time, you will save interest.  Just be sure to read all their terms and conditions to know what kind of interest you will be paying on this new card, when the 'introductory offer' expires.  There are people who claim they have paid off their credit card debt by using this method.  Of course, they also stopped charging through their cards and just concentrated on paying all of them off.  So, watch your mail - you will receive these offers! 

The best debt solution is to eliminate your debt.  The credit card companies have this whole thing rigged in order to keep all of us in debt for the rest of our lives.  One way to beat them at this game is to pay more than the minimum amount due.  If possible, pay a lot more!  They figure the minimum monthly payment on a credit card balance as around 2% of the outstanding balance.  By only paying this each month, it will take many, many years to pay off that balance.  So, pay more each month than the minimum payment they require and stop using the card to charge new purchases.  Try to reach the position where you are paying the card balance off each month and start operating on a cash only basis.