Sometimes, even when we try our best to manage our finances, debt
problems can get in the way. Unexpected circumstances such as sickness,
loss of job, divorce, or business failure can quickly put us in a bad
debt situation. However, being in debt doesn’t have to be a hopeless
situation. In this article, we’ll discuss how you can flee from debt
through different types of consolidation.
Credit Counseling
Some
credit counseling agencies would recommend a debt consolidation program
for consumers with extreme debts. Finding a reliable credit counseling
agency should give you the assistance you need in handling your debt
problem. An experienced credit counselor should give practical and
efficient advice on how you can create a repayment plan, avoid incurring
new debts, and prioritize your repayment.
Debt Consolidation Loan
One
way to consolidate debts is by obtaining a loan. The money loaned would
be used to pay all your existing debts from different creditors. In
turn, you’ll be subjected with only one lender – your debt consolidation
company. Thus, the stress and pressure of dealing with different
creditors is instantly eliminated. Furthermore, by consolidating debts
into a single account, you won’t have to pay multiple interest rates so
you can save more and use the money for repayment.
Debt Repayment Representative
A
debt repayment agency can negotiate with your lenders to reduce your
debts and modify your payment terms. Each month, you’ll submit your
payments to your debt repayment agency- who in turn, would distribute
your payments to the appropriate lenders. Nevertheless, it’s very
important to make sure that you’re dealing with a reliable company and
that all your payments are submitted accordingly.
Credit Repair Clinics
Watch
out for agencies or even non-profit groups who promise to give an
instant “fix” or instant “repair” to your debt problems. Remember that
the only way you can get over your debt problem is by paying off your
debts. If the charges in your account are accurate, there’s no way an
agency can erase or delete these charges from your credit report. Even
worse, these agencies who disguise themselves as “credit repair groups”
may use your personal information against you.
Debt Settlement
A
credit counseling agency may also negotiate with your creditors through
debt settlement. Debt settlement can reduce your debts from 50% to 60%
or even more. However, if your creditor agrees with a settlement, you
are expected to submit your payment in full at the soonest possible
time.
