You are not the only one who wants to get quick and fast relief from the amount of your accumulated liabilities. Many other people are also suffering from the same agony and pain of bad debts. The increase in the unemployment level and rise in the inflation has really disturbed the financial positions of the customers. People are bound to use credit cards as their limited income is not enough for them to meet up their ends easily. The use of credit card is good as long as a person is submitting the installment on regular intervals, but if the person gets unable to manage any payment, the amount of gathered liabilities will get double easily. These days, many debt relief strategies are present in the market. With the help of these strategies, a person is able to manage the debts in a proper and accurate way. People face confusion when it comes to the selection between these strategies.
The Strategies in Brief
- Debt Consolidation: The process of consolidation must be selected when a person is facing the problems of paying back the money to many different lenders or companies. In this method, the fiscal lenders issue one single collateralized loan to a person. This loan is mainly issued for a short period of time. The good thing about this process is this process is that the particular loan is given at low interest rate.
- Debt Settlement: If the gathered amount of debts is equal to ten thousand dollars, then debt settlement is the best way to get rid of this amount. The process is managed by the settlement companies. The financial experts of these companies negotiate with the lenders on the borrower's behalf and due to their efforts; a person is able to get a 50% reduction in the principle amount.
- Bankruptcy: The process of bankruptcy is the oldest way for the elimination of obligations. If the problem of liabilities is not solving with the settlement and consolidation deal, then bankruptcy is the only option which a person should think to file for.
- Credit Counseling: Credit Counseling, also commonly referred to as signing up for a debt relief plan, is another most common form of debt relief service. In this plan you are required to make a one time payment to a credit counseling agency directly, who in turn distributes your payment in the most effective way to your creditors.
In most cases, these agencies will also assist you in reducing your monthly payments by getting the necessary concessions in the interest rate from your creditors. This plan generally continues for a period of five years or so and does not affect your credit ratings.
Advantages of Bankruptcy
The advantages offered by insolvency are that one gains relief from the amount of liability he has obtained by winning an insolvency court and after winning the case the filer gains relief from the entire accrued amount. The disadvantages offered by this method are that the credit ratings of the filer are heavily affected and they slide down to the extent that the borrower has to suffer the inability to gain a new loan amount and inability to get a good job. Even if he is fortunate enough to get a new loan; he has to pay huge amount of interest and has to repay the entire liability amount in a very limited time period. The employers might even employ the filer but they do not pay him well and make him work very hard. There is always a threat to become unemployed for the filer. The credit scores of a filer are very hard to recover and it even takes almost 10 years or more.
Advantages of Debt Settlement
The advantages of settling the liability amount are that the debtor gains relief by paying a marginal part of the amount of money owed. He repays the amount along with low interest charge and extra time to repay the loan amount. The credit scores of the debtor are not very negatively damaged and these credit ratings are easily repairable. The advantages of this method even include the facts that the use of this option does not have to pay up front to the settlement agency hired by him. He pays after the bargaining procedure has ended. This way; even those people can utilize this option that does not have enough wealth to pay up front. The users of this option face fewer issues while looking for a settlement agency.
Advantages of Debt Relief Services
The benefits of hiring the best in the industry are that the best give quality advice. They are very well experienced due to the huge amounts of cases they handle and are aware about almost every scenario. They will provide you with the best advice with their experience and skills. The best in the business hires professional lawyers to tackle the creditors of their clients. These lawyers have a lot of experience and they have the most efficient negotiation skills. These lawyers use their skills to aid their client. The lawyers are completely aware about all the shortfalls of the law of the financial sector and they use these gaps to manipulate the creditor and they get the best deal for their clients. The best in the business can obtain the best deal in the industry for you. Their skills and experience has helped them in getting discounts of about 70%, and even after getting such a big discount; no debtor feels that he has wasted money by hiring the best.
Risks Involved in Debt Relief Services
The downsides of using the most popular settlement organization are that your case might get delayed because of the countless cases these settlement firms get. Your case might not receive top priority and they might not get you the best deal. The best are known for charging higher than anybody in the business. Paying high takes away the advantage of getting a discount on the money you have to repay to your lenders. Paying high only makes sense if you have been provided with a huge discount, otherwise it is just a waste of money.
Tips in Obtaining Better Debt Settlement Deal
- Selection of a Legitimate Firm: If you have decided to use a settlement firm for your case; you have to make sure that you have been successful in selecting a legitimate firm. Only a legitimate firm can aid you in getting a good deal. The illegal firms will try to cheat you and some might even be able to get you a good deal but they might use illegal practices. This way you end up getting a good deal, but this increases your problems as the lender might sue you if your company has used illegal practices against you.
- Fear of Insolvency: You will only be able to get a good deal if your lender thinks that you will file for liquidizing. The threat of liquidizing can get you the best deal because when you file and win; the lender gets nothing and ends up making a huge loss. You have to make sure that you have built a strong case or your settlement agency has built a strong case and you can prove that you are bankrupt. This will aid you in getting you an awesome deal.
- Do-It-Yourself: You can even negotiate for the settlement deal yourself, but you have to make sure that you have acquired the right amount of negotiation skills otherwise you will not be able to tackle the creditors. You have to make sure that you are fully aware about all the technicalities of a liability settlement before going for this option.
- Selection of the Best Firm: Only the best companies can manage to get you a good deal; you have to make sure that the firm you are selecting is the best in the business and have a good track record.
- Attorney: make sure that the agent that is working on your negotiation case is an attorney and has the appropriate negotiation skills. An attorney has the best negotiation skills in the business and can get the best deal for their clients. The attorneys can manipulate the gaps in financial laws to their benefits and can get you the best deal.
Result Oriented Debt Relief Tips
- Look for a Professional Counselor: He can help you in the following areas:
- Communicating with the bank management
- Comparing the pros and cons of relief solutions and picking the right one
- Educating the loan taker about settlement principles and negotiation procedures
- The Need of an Expert Counselor: You cannot afford to take chances when you are searching for relief organizations. If you hire an illegal firm, you will lose a lot of money. In addition to that, a lot of time will be wasted. On the other hand, an expert counselor designs the best possible plan for a loan taker. If you are confused about anything, you can ask him. It is not necessary to pay large sums of money as consultation charges.