options for bankruptcy and to get rid of debt

Many people often do mistake of thinking that bankruptcy is the option that relieve

them from debt but this is totally wrong there are many alternatives to bankruptcy and get relief from debt. One should think about bankruptcy only as a last option when other options do not prove to get relief because it leaves tremendous impact on your credit report and future finance. I believe you do not want your credit ratings touch bottom just because you filed bankruptcy. If you are facing serious stress of debt and want to avoid that without affecting your credit by filing bankruptcy, then read further to know what those alternatives are.

Debt consolidation: this is one alternative to get relief from debt. It helps you when you are facing problem with managing multiple creditors with different interest rates. With debt consolidation, you can consolidate all your debt into single loan where you have to pay only one payment to debt consolidation loan probably with low interest rate compared to previous rate from different creditors. Debt consolidation helps debtor to repay the debt without burden by rescheduling the payment structure to lower monthly payments.

Debt management: there are number of credit counselling services that provide counselling to debtor to educate and help you manage debt properly. If you are concerned about the monthly fee that this type of service charge then there are many non-profit organizations provide services for free where you can use them to explore your debt relief options when you are undergoing hardship. Credit counselling services under debt management plan negotiates with your lender debt payment schedule according to your affordability. At the end of the plan or schedule, you may be able to pay off the debt with ease.

Debt settlement: this is last resort before you file bankruptcy. Filing bankruptcy will cause both the lender and borrower serious concerns as the lender will receive no amount and borrower will affect his credit score and finance future. For this reason, any debt relief experts will not advice you to file bankruptcy but suggest you for debt settlement. In fact debt settlement also affects your credit score but not as much as the bankruptcy. In order to settle your debt the debt settlement representative will ask you to default on payments and let the lender to come forward for debt settlement.

Unless you default on payments, the creditor will not come forward, for this reason the debt settlement professional adopt this way. When you default on payments for 3 to 6 months, the creditor will report to credit rating agencies there by your credit score drops but not as much when you file bankruptcy.

A professional and skilled debt settlement representative can negotiate with you lenders and reduce the balance you owe to al most 50 to 70 percent, that depends on the negotiation skills and the type of debt you have.

options for bankruptcy and to get rid of debt

By: Jack Bronson

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