The only thing common about the debtors is that they want to get rid of their debt, but every debtor has a different situation and needs a different solution. A solution viable for one debtor might not be the best option for another; so selecting an option to get rid of your debt might cause havoc. Some people might think of going to the debt counseling companies but when you are already in crisis, fee charged by the debt counseling company will only add salt to the wound, but selecting a wrong way out of your debt can cause even more financial loss. Let us discuss two of the very common methods and see which one is better for you:
Debt consolidation is the most feasible option for a debtor who has multiple loans at the same time and he is paying the penalties, interests, mark ups. Debt consolidation means taking one loan to pay all the other loans. This loan can be another unsecured loan but usually when you are already bearing the burden of so many loans getting another unsecured loan might not be easy, that is why this loan is usually a secured loan against an asset usually a house. The benefit of this method is that you have to pay smaller installment and lesser interest.
Debt negotiation or debt settlement is one of the frequently used methods of paying your debts as it is a win-win situation for both; the debtor and the creditor. This method has been around for almost 25 years but is in limelight these days courtesy, the government's recent support. In this method you negotiate with your creditor to agree on a reduced amount that will be considered as a lump sum or in installments. Cyndi Greedes, an American associate professor wrote in her article in New York Times "Done Correctly (debt negotiation) can absolutely help people. Before opting for debt settlement you must keep in mind that it is only available for loans over ten thousand dollars. The best thing about this option is that you can reduce your debt to 70% and can pay in lump sum or in installments according to your comfort.
Remember, choosing the right way leads to the destination but if you take a wrong turn you will only get lost!
Debt settlement is a legitimate alternative to filing bankruptcy. Consumers can expect to eliminate around 50% of their unsecured debt with the help of a legitimate settlement program. With the new FTC laws recently passed in July 2010, debt settlement is a much less risky option. If they don't settle your balance you don't have to pay a dime.
Check out the following link for free help from a certified debt relief specialist:
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