Debt Relief Options At A Glance

Many people are suffering with overwhelming debts and looking for a way out. While there is something to be said for filing bankruptcy, it doesn’t have to be the first option to consider. Debt negotiations and debt settlement are two options that anyone can review, weighing the pros and cons of each.

Negotiations

If you are dealing with credit card debt, credit negotiations are a good tool for lowering payments and getting debts paid off quicker. The trick to credit card negotiations is knowing what you need from your creditor, such as a lower monthly payment, a lowered interest rate or a temporary suspension in payments. Medical debts can also be negotiated with creditors, but may require a bit more persistence. The key to medical debt negotiations is knowing your rights. First, these creditors cannot legally apply interest to your account unless you signed a document approving such measures. They can also not seize your assets to recover payments. However, any type of debt negotiation comes with the risk of losing the battle. When this happens, it may be best to seek help from a debt negotiation lawyer.

Settlement

Many debtors are often interested in a debt settlement more than a negotiation just for the fact of a quick and easy reduction in their debt. In a debt settlement, the creditor agrees to accept less than what is owed on the debt in exchange for a lump sum payoff. This payoff can come from you or a consolidation loan, in which you roll your debts into a loan with a single lender who then pays your other creditors. While debt settlement can reduce the overall amount owed on a debt, it can also come with some additional risks. Settling debts by obtaining a consolidation loan increases your risks in that these loan often come with higher interest rates. Also, your credit is also likely to be negatively affected as having debts eliminated, even partially, rather than repaid is reflected poorly on your credit report.