How Do You Spell Debt Relief |
By Tim Gorman |
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Of all the problems possible in a marriage, finances cause the most
marital discord. Many singles consider finances to be their most
worrisome issue. Many times this is due to a heavy debt burden.
Several options exist to help people get debt relief from their
unsecured debts. (Unsecured debt is not linked with a physical
asset. Therefore, credit cards and medical bills are unsecured
debts; a car loan or a mortgage are secured debts.)
One
option for debt relief is bankruptcy. While unsecured debts are
indeed discharged, the long-lasting black mark on your credit
report (up to ten years) makes bankruptcy less than ideal as a
form of debt relief. Further, changing bankruptcy laws will make
it more difficult to file. Bankruptcy should only be a last
resort. It is not a quick fix.
Another option is debt
consolidation. Debt consolidation combines your existing loans
into one loan. While this does away with late fees and
over-the-limit fees, very little is done to reduce the amount of
debt or to renegotiate interest rates. Further, this uses
something as collateral, such as your house. If you still have
trouble paying, you could lose your house to foreclosure.
A third option of debt relief is debt settlement. The debt
settlement company negotiates with credit card companies to
agree to settle for a lesser amount owed, often pennies on the
dollar, of both the interest and the principle. A debt
settlement company also acts as the middleman between the debtor
and the credit card companies, eliminating phone calls that
border on harassment. A downside to debt settlement is that many
debt settlement companies advise you to stop paying your monthly
bills altogether in order to force credit card companies into
settlement. While this may work for some credit cards, others
may be just as likely to take you to court for non-payment, and
debt settlement companies take no responsibility for such
action.
A fourth option for debt relief is through credit
counseling services. This is similar to debt consolidation in
that you pay only one bill to the counseling service. They in
turn take over all your debt payments. The benefit of this is
that any communication with the creditors is handled by the
counseling service. The downside is that credit counseling
services work primarily for the credit card companies. While
they may work for a reduction of interest, they probably won't
work for a reduction of principle.
No matter which option
you choose for debt relief, all are better than doing nothing
and falling further and further behind. Check out all your
options before making a decision. |
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