What are your available options for achieving debt relief?

Many of you think that bankruptcy is the most viable option for achieving debt relief. However, you should try out other options before taking recourse to bankruptcy as it reduces your credit score by about 250 points. So, instead of filing a bankruptcy, take help of professional debt relief options that are quite effective in making you debt free.

4 Professional debt relief options

Here are 4 professional debt relief options that help you to pay off your outstanding dues in a systematic way.

Credit counseling – The initial step towards paying off debt

It should be your first step towards achieving debt relief. When you go for a credit counseling session, a counselor carefully examines your financial status and offers suitable suggestions to manage your personal finance. The counselor also offers budgeting tips and educates you on how to make proper use of your credit.

Debt management – A suitable way to get rid of debt 

A counseling agency may offer you a debt management plan when simple budgeting tips are not enough to repay your dues. In a debt management plan, the counselor negotiates with your creditors to reduce your loan interest rates so that it becomes easier for you repay your dues. After assessing your financial condition, the counselor also decides upon a monthly payment with which you can repay all your debts.  When you make the payment to the agency, it distributes the amount amongst your creditors.

Debt settlement – Reduce the outstanding debt amount 

You can take help of a settlement program for achieving debt relief quickly. In this program, the debt negotiator, on behalf of the settlement company, negotiates with your creditors to reduce your outstanding debt amount. A successful negotiation is able to reduce your dues by about 40-60% of what you owe to your creditors. The negotiator also decides upon an affordable monthly payment that you need to deposit into a settlement fund. As your creditors agree to a payoff amount, you need to settle the debts by using the funds accumulated in your settlement account.

Debt consolidation – Repay debt with the help of one monthly payment

A consolidation program is similar to a debt management program, only difference being that a consolidation company negotiates with your creditors instead of a counseling agency. In this program, a debt consultant, on behalf of the consolidation company negotiates with your creditors to reduce the interest rates on your loans/debts. With your creditors’ approval, the consultant also decides upon a monthly payment, which you need to send to the company. In turn, it distributes the amount amongst your creditors.

You can also take out a consolidation loan for achieving debt relief. It is similar to a personal loan with which you can repay all your dues at once. Thus, you actually replace all your monthly payments by a single one every month. Moreover, your new monthly payment is comparatively less than the sum total of your existing payments. Thus, you can obtain a consolidation loan and become debt free on your own without any professional help.


Keyphrase: achieving debt relief

Description: Check out 4 options for achieving debt relief. These options are credit counseling, debt management, debt consolidation and debt settlement.