No one enjoys being in debt. It is a stressful position full of many tough decisions, but finding help can be just as overwhelming. Many people have a limited idea of the debt relief options available and how they can help. Getting to know the options is the best way to help choose the right type of debt relief.
One of the most overlooked options is debt negotiation. Every consumer has the right to negotiate their debts with their creditor directly. A debt negotiation involves a direct arrangement for the repayment of debt between the consumer and creditor. In many cases, consumers can have their interest rates lowered or suspended, delinquency fees waived or even obtain a suspension in payment due dates for a short period of time. Debt negotiation is a great first step to finding debt relief, as it may be all one needs to find relief from a large debt burden.
Many people assume that debt settlement is their best option when finances become tight. While settling debts can lower the principal amount owed on a debt, it does come with additional risks. Settlements are often difficult to negotiate with a creditor, costing the consumer more by way of a third party company to assist. Also, having debts “settled” can lead to more credit consequences and cannot guarantee that assets will be protected down the road.
While debt negotiation is a great first step, not all negotiations will be successful or even beneficial for the consumer. Someone experiencing a significant financial hardship or who has assets at risk of liquidation may not be able to resolve their debt troubles through a negotiation with their lender. Filing for bankruptcy can provide debt relief, while also halting collections, wage garnishments, repossessions and foreclosures. In general, bankruptcy provides a deeper level of protection than other forms of debt relief.