You are not the only one who wants to get quick and fast relief from the number of your accumulated liabilities. Many other people are also suffering from the same agony and pain of bad debts. The rise in the unemployment and inflation level 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, then the amount of gathering liabilities easily gets double.
These days, many debt relief strategies are available in the market. With the help of these strategies, a person can manage the debts in a proper and accurate way. People tend to get confused when it comes to selecting the best one out of these strategies.
Here is a brief explanation of these strategies:
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 that the particular loan is granted at a 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 principal amount.
Bankruptcy: The process of bankruptcy is the oldest way for the elimination of obligations. If the problem of liabilities is not solved with the settlement and consolidation deal, then bankruptcy is the only option to go 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, which 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 bankruptcy are the ones that gain relief from the amount of liability if a debtor wins in an insolvency court. After winning the case, the filer gains relief from the entire accrued amount. The disadvantages this method entails, include the affected heavily credit ratings of the debtor, as they slide down to the extent that the borrower has to suffer the inability to gain a new loan amount and in some cases, get a good job.
Even if he/she is fortunate enough to get a new loan; he/she has to pay a huge amount of interest and has to repay the entire liability amount in a very limited time period. There is always a threat to become unemployed for the borrower. The credit scores take a bad hit and it can take almost 10 years or more to recover.
Advantages of Debt Settlement
In this strategy, the debtor gains relief by paying a marginal part of the amount of money owed. He repays the amount along with low-interest charges and extra time to repay the loan amount. The credit scores of the debtor do not get very negatively damaged and these credit ratings are easily repairable.
The advantages of this method are that the debtor does not have to pay the amount upfront to the settlement agency. The amount to be paid is only due after the bargaining session is concluded. This helps those people who do not have enough money to pay upfront.
Advantages of Debt Relief Services
The benefits of hiring the best in the industry include an opportunity to get the best quality advice. They are very well experienced due to the huge amounts of cases they handle and are aware of almost every scenario.
They will provide you with the best advice using their experience and skills. Hire the best in the business professional lawyers to tackle the creditors of their clients. These lawyers have a lot of experience and the most effective negotiation skills. These lawyers use their skills to aid their clients.
The lawyers are completely aware of all the shortfalls of the financial law sector and they use these gaps to manipulate the creditors to get the best deals for their clients. Their skills and experience have helped them gain discounts of about 70%, and after getting such a big discount; no debtor feels that he/she has wasted money by hiring the best.
Risks Involved in Debt Relief Services
The downside of using the most popular settlement organization is that your case might get delayed because of the countless open cases these settlement firms have on their hands. 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 a big sum of money takes away the advantage of getting a discount on the money that you have to repay to your lenders. This only makes sense if you have been provided with a huge discount, otherwise, it is just wastage of money.
Tips for Obtaining Better Debt Settlement Deal
Selection of a Legitimate Firm: If you have decided to use a settlement firm for your case; then 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 with the use of illegal practices. This increases your problems as the lender might sue you if your hired company has used illegal practices.
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 with a huge loss. You have to make sure that your settlement agency has built a strong case, proving 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 it will be really difficult to tackle the creditors. You have to make sure that you are fully aware of 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. Make sure that the firm selected is the best in the business and has a good track record.
Attorney: Make sure that the agent working on your negotiation case is an attorney and has the needed negotiation skills. An attorney has the best negotiation skills in the business and can get the best deal for their clients.
Result Oriented Debt Relief Tips
Look for a Professional Counselor to get help in the following areas:
- Establishing communication with the bank management.
- Comparing the pros and cons of debt relief solutions and picking the ideal one.
- Sharing knowledge with the loan taker about settlement principles and negotiation procedures.