If debt collection agencies or debt servicing companies are harassing you day in day out then you must think about taking an action. Why should you live in constant stress of repaying back your debt if you have already planned a way out and you need some time to take sigh of relief?
Earlier there was only one legal solution in the US to say good bye to debt and that was Bankruptcy. Gone are those days! Nowadays there are more than one debt relief services and one has to wisely understand each such option and choose the one which is best suitable to his financial capacity. Remember not every debt relief service is made for you.
Following are some of the wide spread debt elimination techniques:
Don’t you think a single monthly repayment plan for debt elimination sound good? That is nothing but debt consolidation technique. The simplest way is to compile all the debts together and take out fresh personal loans with bad credit to pay off the whole pool of debt.
The benefits can be many e.g. reduction in the interest rate, longer period to pay off the fixed repayment plan, debt burden is shared in more number of years and one has to handle each month separately. However some experts believe in debt consolidation one may end up paying more eventually.
The experts work better than you in debt elimination. This is exactly the case with the debt management technique wherein the debt counselors understand the debt situation of the debtor and put efforts to design a repayment plan for him. He considers the minimum expenses required to be spent and set it aside. In addition to that he bargains with the creditors and using his experience to reduce the debt as far as possible. By this way, the debtors slowly reduce his debts and may end up reducing the interest or penalties. The disadvantage of debt management is that the creditors may like to receive the debt delayed instead of accepting the negotiations of the debt counselors. The costs of the experts may be higher than the total benefits received out of the debt management plan.
The word settlement itself is to accept the debt at a lower payment. The debtors take help of the professional settlement counselors who reduces the total debt to certain extent and creditors accept it because they know the debtors would otherwise go into bankruptcy and they may not receive the amount they otherwise receive through this plan. The debt settlement plans are also available for IRS tax debts or federal student loans. On the disadvantage side, the forgone debts are considered as deemed income of the debtors and tax can be payable on it. The accounts of the debtors are considered as “Paid as settled” and it can affect the credit score of the debtors.