SPFSaves.com Debt Consolidation Reviews
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Debt Consolidation: Many Different Options
“Debt Resolution,” also known as “Debt Settlement” or “Debt Negotiation,” is an increasingly popular option.
Credit Associates, our top-rated debt resolution company, negotiates with creditors on your behalf to reduce the total amount you owe, have the creditor take a loss on the remaining debt balance, and agree to a new deal with creditors to make monthly payments over a 2 to 3 year period.
A debt resolution program will negatively affect your credit score but it will allow you avoid bankruptcy and your credit score will likely improve once you complete the program.
Your days of being taken advantage of will be over.
Pay Off Debt In Monthly Installments
If your debt is manageable, you can pay off your debts in monthly installments and manage the entire process on your own. You should keep in mind that if you can only afford to make the minimum monthly payment, you may be in for a long ride. A $2,000 credit card balance that carries an 18% annual rate can take just over 30 YEARS to pay off in you only make the 2% minimum monthly payment every month.
Be sure to put as much extra money as you possibly could towards the accounts with the highest interest rate as you pay off each credit card.
Debt Consolidation Loan
Taking out a loan to consolidate your debt is another popular option. It can reduce your overall monthly payment and provide some short term relief. That’s the good news. The bad news is some of these loans have longer terms and it could mean that you will pay even more interest in the long run.
A debt consolidation loan can cause a temporary dip in your credit score. The lender will run what is called a “hard credit inquiry” which can lower your score by a few points. On the other hand, if you improve your financial budgeting and make all your payments on time, the result will most likely be a positive affect on your credit score.
Home Equity Loan
If you are a homeowner, you may want to consider a home equity loan. Home equity loans and lines of credit are practical and convenient ways to access cash. By tapping the equity in your home, you can borrow cash at low interest rates.
There are a few risks associated with home equity financing.
- The interest rates may only be fixed for a few years and are subject to periodic rate increases.
- If you don’t pay, you may lose your home to foreclosure.
- The equity in your home fluctuates.
- Making minimum payments could make things even worse down the line.
Filing bankruptcy is generally the last resort. If you are unable to pay your debts and you don’t see any other way out, you should contact a bankruptcy professional to get legal advice.
You should keep in mind that in a bankruptcy, you are at risk of losing all your assets and possessions. A bankruptcy will negatively impact your credit score for the long term and it is up to the court to decide if you qualify for a Chapter 7 (entire debt wiped out) or a Chapter 13 (a percentage of the debt will be wiped out).
A Chapter 7 is the most popular method of bankrutpcy in the United States. All your debt is wiped out with the exception of tax debts, domestic support obligations, and federal student loan debt.
A Chapter 13 requires you to pay back a percentage of your debts over time. It takes longer and costs more but you have a greater chance of keeping your home with an approved payment plan.
Debt management is a term that is also tossed around on the internet when searching for ways to get out of debt. This strategy is based on lowering the interest rate of the credit cards to make your payments more manageable.
It is a widespread belief that debt management companies, otherwise known as consumer credit counseling agencies, are non-profit organizations.
If you choose to work with a debt management company, you need to be sure that (1) there are no hidden fees; (2) the debt counselors are certified; (3) educational materials are free of charge; (4) they offer budgeting support; and (5) they are a member of a national credit counseling organization.
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