Want to lower your debts? Need a debt management plan? We could all use a little help with our debt burdens, but getting started can be the most difficult part. The best way to get yourself moving is to learn a few important terms that can help you begin to review which debt relief option is best for you.
Bankruptcy— is a debt relief tool that is designed to help those who are financially insolvent resolve their debt burdens. Filing for bankruptcy should be pursued as a last resort option by only those who lack the income necessary to repay debts or have assets at risk of foreclosure and repossession.
Credit Negotiations— is a way for debtors to relieve their debt troubles by securing a lower monthly debt payment. Credit negotiations can result in lowered interest rates, waived delinquency fees, temporary suspensions of payments or payment extensions. This strategy should be pursued directly with the lender first before other debt relief options are considered.
Debt Settlement— is a form of debt relief that entails negotiating a lowered principal amount of debt owed with the lender. It essentially creates an agreement in which the lender agrees to accept less than is actually owed on the debt in exchange for absolving the debtor of liability over the debt once payments are complete. While settlements can be beneficial they should be considered only after personal debt management and credit negotiation strategies have failed.