Avoid Filing For Bankruptcy - 3 Debt Relief Options To Consider Before Bankruptcy

Avoid Filing For Bankruptcy - 3 Debt Relief Options To Consider Before Bankruptcy

If you know the adverse effects of bankruptcy on your financial status and want to avoid it, but not sure what other option to choose, this article will help you great deal in making this decision.

1. Debt Settlement

No creditor wants you to file bankruptcy because in this way he will not be able to recover a single penny, but when you opt for the debt settlement the creditor might try to ignore you as he wants to keep getting the monthly payment along with the interest. Don't lose hope and keep calling again and again until he agrees. It is always good to seek help from the professionals, hire a debt settlement company.

The settlement company will get you a best possible deal. The thing that makes debt settlement the best available option is that your debt can be reduced up to 70% and you can pay according to your comfort. Also, your credit rating will not decline and you can apply for loans in the future as well!

2. Debt Consolidation

If you are about to hit bankruptcy, Debt Consolidation might not be the best choice for you until you hire a debt consolidation company which will negotiate with the creditors to lower monthly payments and also reduce the interest rate. This option is more viable for a defaulter with multiple outstanding loans. You have to pay one monthly payment to the consolidation company which will distribute the amount to the creditors.

If you have any personal asset i.e. a house you can get a secured loan against it at much lower interest rates and monthly installment and pay all the outstanding debts lump sum, which will decrease the interest and penalties.

3. Credit Counseling

Credit counseling involves founding a Debt Management Plan by conferring with the creditor to adjust their recovery process and agree on reduced payments and interest rates on a flexible schedule for the consumer. Credit counseling services are mostly non-profit organizations with the purpose of enlightening debtors about debt management programs. Most of their consultation services are free of cost but debt management program involves monthly fee. If you feel that the monthly fee is high, you can always bargain or look for another company with a lower fee.

Debt settlement is a legitimate alternative to filing bankruptcy. Consumers can expect to eliminate around 50% of their unsecured debt with the help of a legitimate settlement program. With the new FTC laws recently passed in July 2010, debt settlement is a much less risky option. If they don't settle your balance you don't have to pay a dime.

Check out the following link for free help from a certified debt relief specialist:

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