Which one of these Credit Card Debt Solutions will work best for you?

The good news for debtors is that there are ways to become debt free, however the bad news is there is not many. 

Consumer credit counseling:

This method of debt relief used to be very popular among debtors. However as the economy has been sinking and people have not been making as much money this debt solution has been losing its strengths. 

The benefits of a credit counseling program are that the creditors will usually lower the interest rate on the accounts owed. The average rate on a credit counseling program may run between 10-15%. The next major benefit of the program is that you can achieve debt freedom usually between 5-7 years. Reason being is that you will make a fixed payment every month as opposed to the monthly minimum payment. 

The downside to this program is that for many people it is still too costly, usually you find yourself paying pretty much the same amount you were paying to your creditors in the first place. So for those who are suffering to make the payments now, this solution will not be for them. Plus if you miss as much as one payment the creditors will revoke the benefits of the program. So the debtor must be sure their financial situation is stable for the duration of the program.

Debt Consolidation Loan:

This is perhaps what most people think of first when searching for a debt solution. For starters usually this will entail you having to put up collateral to obtain this type of loan. Many times the debtor will have to take the loan out against their home. So if you have nothing such as a home for collateral this option will not work at all.

 Second the person must have immaculate credit. Problem for most debtors is that even if you have never missed a payment if you are stuck deep in debt you will not have immaculate credit.

Finally yet importantly this method is truly not one of debt relief, but more of a debt transformation. Essentially what you will be doing is taking your lower risk unsecured debt and transforming it into a much higher risk secured debt. So if you default on the loan you may lose your home, instead of just hurt your credit.

Debt Settlement otherwise known as Debt Negotiation:

Over the past 4-5 years this method of debt relief has become increasingly more popular, especially for people who are hurting due to the economic condition here in the U.S.

This method of debt relief involves negotiating a settlement with your creditors to payback the debt at a much lower amount than owed. The benefits of this program a very lucrative, for one you will be saving a tremendous amount of money. For two you will find yourself out of debt within 2-3 years, which is far quicker than the 30+ the creditors are trying to put you through.

The only true drawback to debt settlement is you must fall behind on the debts owed for the creditors to be willing at all to negotiate on an account. So during the beginning of this process your credit score will suffer. The damage done is not irreversible and you score can go back up once you have settled the accounts. But if you find yourself stuck deep in debt your number one priority should be to become debt free not worry yourself with how you will obtain more debt in the future.

If you are considering debt negotiation it is wise to hire a professional debt negotiation service.

Click here to learn more about what a debt negotiation service can do for you.