Taking on debt can be stressful, but fortunately, there are several debt relief options available to you. All you need to do is understand your options and find the type of debt relief that is right for you.
You may have a student loan you used to pay for your education. Or, you applied for a vehicle loan so you could drive to work. Even a credit card balance can get out of control when you do not know how to manage debt. Learn about all of your debt relief options below to help you get out of debt and become financially wiser!
Choosing the right debt relief option can be confusing. Each method has different pros and cons. Most popular debt relief options include the following:
· Consolidating debt – You can pay off all your creditors with a low-interest rate loan. A consolidation loan reduces the number of monthly payments you own. It can also lower your total monthly payment with a better rate or terms. This debt help method can improve your credit as well.
· Debt settlement – In some cases, your creditor may accept a lower payment and forget the remaining balance. The company wants to recoup what it lost. It may settle for a one-time lump sum and forgive the remaining debt. For instance, your credit card company may accept a payment covering all of the principal but not the interest charges.
· Collections – Your creditor may sell your debt to a creditor instead of negotiating a settlement or payment plan. The collection agency may also agree to a financial agreement that is beneficial to you and them. If your debt goes into collections, however, you will have negative marks on your credit history.
· Declaring bankruptcy – If you simply cannot pay off your debts, filing for bankruptcy is a way to protect yourself from your creditors. However, filing for bankruptcy is one of the worst things you can do to your credit.
Click to the next slide to find out what happens when you declare bankruptcy and if you are a good candidate to file.