Credit Debt Solutions

The key thing to remember is that your credit counseling service will know which choices are best when you are seeking Credit Debt Solutions ...

Sometimes things get so bad financially that you just want to throw in the towel and declare bankruptcy. While this might be an option, is may not be the best of credit debt solutions available to you. First of all, since the new bankruptcy laws went into effect in 2005 it is more difficult than ever before to get a ruling. The law mandates that you receive credit counseling within 180 days prior to filing.

Since you will need credit counseling in any case, there just might be better options available to you that can restore your credit score in a much quicker period of time. Bankruptcy takes 10 years to clear from your credit history whereas debt settlement and debt consolidation can be accomplished usually within about 3 years.

One very important thing to look for is free credit counseling. Reputable companies do not charge for counseling services. There are fees attached to other services, but counseling should always be free. Also, make sure they are affiliated with at least on nationally recognized organization. Just as creditors check your references, you should check the references of any companies you will be trusting with your personal finances.

When you find a credit counselor to work with, one of the things they will probably discuss with you is credit debt management. You didn’t get in this position making good financial decisions and you will want to avoid the same mistakes in the future. Good credit counselors are able to teach you how to manage your finances better so that you can stay debt free once you get there.

Some of the options that might be available to you would be:

• Debt Settlement
• Debt Consolidation Services
• Debt Consolidation Loan
• Refinancing Mortgage for Debt Settlement/Consolidation
• Bankruptcy

Debt settlement usually entails your creditor accepting a portion of what is due so that they don’t need to take a total loss. Once you pay off the figure they agree to your account is closed. Debt consolidation services would probably be handled by your credit counselor. You would make monthly installments to your counselor’s company who in turn distributes payments to your creditors.

If you own your home and have any equity established you might qualify for a debt consolidation loan under the umbrage of a home equity loan. Some consumers even refinance their first mortgage because the interest rates tend to be lower than on a second mortgage (home equity loan.) Unfortunately, sometimes there is not enough equity built yet to use as collateral so this might not be a viable option. And, obviously this option is not available to renters.

Only as a last resort would your counselor probably suggest filing for bankruptcy. If there are other alternatives that could restore your credit score in a quicker period of time, those would be better choices and your counselor will advise you of this. However, if you just don’t have the resources to pay your debts and this is the only debt relief available to you, bankruptcy is still an option.

The key thing to remember is that your credit counseling service will know which choices are best when you are seeking credit debt solutions. Although they may give you several options, they most likely will tell you which alternative is in your best interest. While you don’t need to go with their advice, it is probably wise to listen to them. After all, you got in this position probably by making poor financial decisions. It just might be time to listen to the pros.