Avoid Bankruptcy With Debt Management

Bankruptcy is usually a last resort for most people

. While it might seem like a good sigh of relief because you've wiped out your debt, it's not a "fun" process and it will stay on your credit report for several years. After filing, you will have to work hard to build up your credit and it can be difficult to be approved for future loans. Your first option should always be debt management, of which there are many types depending on how deeply you are in debt.

One way to lower your debt is debt consolidation. Debt consolidation is when you borrow money from one bank to pay off all other debts. You are then left making payments to the one bank instead of to multiple creditors. Besides convenience, the interest rate is lower so the debtor can pay off the loan much more quickly. Another benefit is that it will not hurt one's credit score, but you should already have good credit in order to qualify, along with consistent income.

Similar to consolidation is debt management plans. Again, the debt will be consolidated to one monthly payment and there will be lower interest rates. So what's the difference? Well the tough part about the previous plan is that you have to qualify for the new loan. With debt management, there is already a pre-negotiated lower interest rate with the debt settlement lawyers. The monthly payments will be made to the lawyers who in turn pay the creditor. This is often a better option for people.

Debt settlement, also known as debt reduction, is when the attorneys negotiate with creditors to lower the amount of money that is owed. But it's not just a few hundred dollars, the best debt settlement lawyers can lower your debt by thousands of dollars. However, depending on your situation, this may or may not hurt one's credit score. This option is best for people who have really fallen behind on payments.

Hopefully settlement can solve people's problems. But, as a last resort, bankruptcy could be necessary. It's best to discuss your financial situation with a lawyer to determine if bankruptcy is the right path. If you feel like all other options have failed and the debt is just far too much, think about filing for bankruptcy.

It's easy to feel like you're just digging deeper and deeper into debt, but with the right plan of action and the help of debt settlement lawyers, you can get yourself out of that hole.

by: Mark Etinger

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