Debt Solutions - 3 steps and 6 ways to do it
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Are you in debt?
- Are you in trouble paying your debts?
- Can you pay the minimum on credit cards?
- Are your medical bills mounting up?
- Are you getting collection calls?
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Enjoy financial relief
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With debt solutions, you can:
- Reduce your interest rates
- Get low monthly payment
- Waive off late fees
- Stop collection calls
- Consolidate bills into single payment
- Get debt free within a short time period
6 debt solutions - How they can help you
We have listed below 6 solutions to get rid of credit card bills and other debts.
- Debt Consolidation: This is one of the solutions to credit card debt and other bills. Here creditors agree to cut down the interest rates and eliminate or reduce late payment charges. You need to make a single monthly payment to your consolidation company which then distributes the money to your creditors. Watch out for the 8 debt consolidation benefits.
- Debt Settlement: With this method, the company helps you to negotiate and reduce your outstanding debt/bills by 40-60%. You'll have to pay a fixed amount each month to your settlement company. The payments accumulate into lump sum cash after months. The lump sum cash is then paid off to your creditors.
- Debt Management (DMP): This involves a credit counseling session wherein a credit counselor analyzes your finances and debts. The counselor prepares a budget for you so that you can put in more cash towards debt payment. If you are knee deep in debt, the counselor may suggest a DMP wherein he negotiates with your creditors in order to lower the interest rates and cut down late fees.
- Self Repayment plan: This is a self-help plan using which you can pay off debts on your own. No professional help is taken here. The self repayment plan will be successful if you follow a tight budget on a monthly basis.
- Bankruptcy: Filing bankruptcy is no doubt one of the debt solutions. But it should be considered as your last resort because it hurts your credit and brings down your score by 200 points or more. Hence it's better to avoid bankruptcy and look for other debt solutions.
- Ostrich Method: This method of dealing with debt involves taking no steps to pay off debt. It is based on the concept that you ignore debt and it will vanish. However, it is not advisable to ignore debts because your credit will be ruined if you don't pay. Moreover, your creditors may sue you or the collection agencies may harass you constantly.
Comparison of consumer debt solutions
| Questions | Debt Consolidation | Debt settlement | Debt Management | Self Repayment plan | Bankruptcy |
|---|---|---|---|---|---|
| Will creditor or collection calls stop? | Yes. They will communicate with your consolidation company. | Yes. All communication will be done via a settlement company. | Yes. Debt management company will communicate on your behalf. | Yes. But make sure you keep paying every month. | Yes. It is illegal to call you after the filing. |
| Will interest rates be lowered? | Yes. The company negotiates to lower interest rates. | No. | Yes. The company negotiates to reduce the rates. | No. | Not all debts can be included. So, interest payment of those included will be eliminated. |
| Can I save on principal debt amount? | No. | Yes, you'll save 40-60% of the outstanding debt. | No. You'll save in interest when rates are lowered. | No. You can save in interest if rates are cut down. | Debts are discharged; hence you're no longer personally liable towards the debt. |
| What are the third party fees? | a) One time representation fee to send letters and receive calls from creditor/collection calls. b) Monthly representation fee. |
a) One time representation fee. b) Monthly representation fee. c) A percentage of savings on debt. |
a) One time representation fee. b) Monthly representation fee. |
No. | Filing fees and attorney fees. |
| Credit effects of debt solutions | |||||
| Impact on credit score | Positive | Negative | Positive | Highly positive | Highly negative |
| Entry on credit report | It remains on the report till account is paid in full. | Late payments stay for 7 years; account reported as "Paid", "Settled", "Paid as agreed". Negotiate for "Paid", "Paid as agreed" status. | Report shows you're paying through credit counseling agency or Debt management company. | Account reported as "Paid". | Remains on credit report for 7-10 years. |
| Negative affect on credit score | No. | Late payments bring down your score. But once you pay off debt, your score improves gradually. | No. | No. On-time payments will have a positive impact on your credit. | Brings down your credit score by 200 points or more. |
| Availability of new credit | It will take some time before you get new credit. | Late payments will make it difficult to qualify for new credit. | It will take some time before you qualify for new credit. | Getting new credit will be easier. | Cannot get new credit for 2-4 years. |
| What we suggest | No obligation free debt counseling | No obligation free debt counseling | No obligation free debt counseling | Do it Yourself | Avoid bankruptcy |
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