Watch video: How can you choose the best debt relief option?
How to choose the best debt relief option
by Michael BoveeAnalyze all the debt relief options and choose the right one
Debt relief options are limited when you're unable to resolve your debt problems by reducing expenses and saving money to pay down debt aggressively. Debt relief options are few, but you should consider each one in your effort to repay your bills. When you can no longer afford a high debt load, you can look for legitimate options like Debt settlement, Debt management, Bankruptcy.
You need to understand and gather information to decide which options will meet your debt relief needs. Which one will best suit your immediate debt problem and your future credit and financial goals? Watch the video to know how you can choose a debt relief option that fits your financial situation.
- Debt settlement - Negotiating to reduce the debt payoff amount
- Bill consolidation - Making a single monthly payment to repay your multiple unsecured debts
- Debt management - Reducing your monthly payments to an affordable level and paying off unsecured debts (credit cards, medical bills) in 4 to 5 years
- Bankruptcy - Where you can discharge your debts or be placed on a court sponsored repayment plan
How to choose a debt relief option
- Make a note of your debt amounts
- Calculate your overall income
- Analyze whether or not you can repay the debts in full
- Compute how much you can shell out monthly to repay debts
- Decide whether or not you want to keep your credit score intact or improve it
- Think whether or not you can repay debts on your own or need professional help
If required, you can discuss these things with a knowledgeable person to decide whether debt consolidation option is more suitable or other debt relief options will work better for you.
41 Ways to compare and contrast major debt relief options
| # | Questions | Interest Rate Arbitration | Debt Management | Debt Settlement | Bankruptcy |
| 1. | Will you get free budget counseling? | ||||
| 2. | Does principal amount get reduced? | ||||
| 3. | Does interest rates get reduced? | ||||
| 4. | Does it affect credit score negatively? | ? | ? | ||
| 5. | Does it help increase your credit score? | ? | ? | ||
| 6. | Will it help getting rid of creditor/collection calls? | ? | |||
| 7. | Does it help repay unsecured debts? | ||||
| 8. | Does it help repay secured debts? | ||||
| 9. | Can you discharge unsecured debts? | ||||
| 10. | Can you discharge secured debts? | ||||
| 11. | Does it help repay tax debt? | ||||
| 12. | Are creditors bound to accept it? | ? | ? | ? | |
| 13. | Does it kill your debts? | ||||
| 14. | Do you have to pay any professional fee? | ? | |||
| 15. | Do you need to pay upfront fee? | ? | ? | ? | |
| 16. | Can creditor come after you for remaining balance? | N/A | N/A | ||
| 17. | Do you need to pay any tax? | ? | |||
| 18. | Can you preserve your privacy? | ||||
| 19. | Will it help you obtain new loans in future? | ? | ? | ? | ? |
| 20. | Do you become debt free within few days? | ||||
| 21. | Can you still be sued? | ||||
| 22. | Can you incur debt again? | ||||
| 23. | Do you need a collateral? | ||||
| 24. | Can you repay debts with single monthly payments? | ||||
| 25. | Can late fees get waived off? | ||||
| 26. | Do you have to pay a penalty? | ||||
| 27. | Is there any chance of wage garnishment? | ||||
| 28. | Does it wipe out community debts? | ||||
| 29. | Does it remove lien? | ||||
| 30. | Does it stop foreclosure? | ||||
| 31. | Do you need to save money in a trust account? | N/A | N/A | N/A | |
| 32. | Do you need to appoint a lawyer? | ||||
| 33. | Do you need to sign any agreement? | ||||
| 34. | Does it provide legal protection? | ||||
| 35. | Can creditors contact you? | N/A | ? | ? | |
| 36. | Can you do it yourself? | ||||
| 37. | Should you continue using your plastic cards? | ||||
| 38. | Is it a legal solution? | ||||
| 39. | Does it help you repay your payday loans? | ||||
| 40. | Does it help repay student loan? | ? | ? | ? | |
| 41. | Does it help you pay off your medical bills? |
FAQ
Does choosing a debt relief option also involves selecting a specific debt consolidation option?
Yes, though the basic consolidation strategy is the same, depending on the nature of your debts and your financial condition, you can choose a particular debt consolidation option to repay your debts in full.
Is a debtor free to choose a debt relief option?
Well, a debtor has to take the call of selecting one or two debt relief options, but it largely depends on the amount and nature of the debtor’s debt. If that person is not able to repay the debts in full, then debt settlement is the only option if not bankruptcy.
Does the company matter when you’re choosing debt relief options?
Yes, of course. You need to take the help of a reputable consolidation or settlement company that is reliable and into business for quite a long time. You also need to check the BBB ratings and customer reviews to select an authentic debt relief company.
How can you do the debt consolidation comparison and select the most suitable method?
First of all, gather knowledge about the consolidation methods. It will help you know the pros and cons of each of the options so that you can choose the best suitable one for your financial situation.