Finding Your Way Out Of Debt

The road to financial freedom is much more difficult than the road that lead you there. Getting out of debt is not always easy and you can bet it is going to take tough decisions and a lot of effort on your part. There are several ways to alleviate your debts, each of which come with their own benefits and risks.

Bankruptcy

Although many people fear bankruptcy, it actually can be quite helpful for many people. Not only can you relieve your debt burden, but you may even find your credit has a better chance of being repaired than by pursuing other options like debt settlement. However, bankruptcy isn’t for everyone and there are certain qualification standards that one must meet in order to qualify. In general, bankruptcy is beneficial for anyone who cannot afford to repay the total debt amount owed, has been unsuccessful in obtaining a debt negotiation or settlement deal or whose assets may be at risk of liquidation from creditors.

Debt Settlement

For some people, seeking help through debt settlement is a good way to lower monthly debt payments. Settling debts with creditors basically entails you obtaining an agreement, by which the creditor agrees to accept less than the total amount owed on the debt. However, successfully obtaining an settlement agreement can be difficult and creditors are not always willing to participate. Further, when you settle your debts, your credit history is likely to be affected by the label of your debts being “settled” rather than “satisfied”. Debt settlement is a good option for anyone who can afford to repay a portion of their debts if they are able to successfully secure a settlement agreement and whose credit can withstand the damage.

Debt Negotiation

Typically the first step for many in the debt management process, debt negotiation is a great way to begin resolving your debts. By negotiating with creditors directly, you may be able to lower your monthly payment, extend the amount of time you  have to repay your debts or lower the interest rate on your account. Debt negotiation tends to have less damaging effects to your credit and can help you resolve your debts outside of bankruptcy, which creditors prefer. Debt negotiation can be beneficial for anyone who can afford to repay their total debts owed over modified terms, who isn’t severely delinquent on their accounts and whose assets are not at risk of liquidation by creditors.