Become more knowledgeable of the good and the bad with debt relief
We here in U.S are on the threshold of experiencing a major credit problem. The sum of credit card debt has hit a record high and we are nearing what many consider to be a recession. This is leaving many individuals with fewer dollars in there wallets and more bills that they have to pay on. In this writing I will review the ups and downs of the diverse available systems of credit card debt relief.
Pros- Consolidate monthly payments, reduced interest rates, fixed payment structure.
Cons- Long term repayment, strict program, most do not graduate program, obtaining a mortgage on the program is almost impossible, usually payments are close to what minimums were before joining, the creditors will kick you off the program if one payment is late or missed.
Bankruptcy:
Pros- A full discharge of debts owed if you qualify for a Chapter 7, the collectors cannot call and harass.
Cons- Long term negative effect on credit score, made a public record for the rest of the debtors life, change in bankruptcy law made Chapter 7 very hard to qualify for, if forced into Chapter 13 court dictates how much you must pay for how long, debt has no say.
Pros- Debtors can save a tremendous amount of money of what is owed, fastest way to get out of debt, not made a public record.
Cons- Short term negative effect on credit rating, dealing with collectors, possibility of lawsuit.
All of the above methods do have their respective pros and cons. However what really determines which system is proper for you really depend on the current monetary situation that you are in. For individuals swamped deep in debt but have income to pay a portion of it off then debt settlement would be best, to help avoid bankruptcy. Those who have smaller debt amounts and have no problem making the payments they currently have plus more, than credit counseling is better. However there are some people out there who have literally no choice but to go into a bankruptcy proceeding.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.
Published March 4th, 2008
