Debt Relief Services

Do you feel trapped by your overwhelming debt?  No matter what you do, does it seem as if your balances never seem to go down?  If you have too much debt and can barely make your minimum payments to your creditors, you need to look at your options.  There are different types of debt relief services available for you.

Consumer Credit Counseling - This is an option that may make sense for you.  Getting rid of credit card debt is one of our specialties. Through consumer credit counseling, a debt counselor reviews all your debts and negotiates with your creditors to reduce your interest rates.  They consolidate all your debts into one lower payment.  This program is generally 5 to 7 years long.  You end up paying back everything you owe to your creditors, just at a lower interest rate.  The negative aspect of this program is that it shows up as a “third party intervention” on your credit report and each account that is enrolled into this program is flagged as such on your credit.  In addition, some creditors view consumer credit counseling as similar to a bankruptcy.

Debt Settlement - This could be a great debt relief option for you if you are only making the minimum payment on your credit cards or start to fall behind on them.  Through this option, your debt is negotiated down with your creditors.  You end up paying a fraction of what is due to them.  The average settlement can range from 40 to 60% off your current balances.  This is different from consumer credit counseling because in this case your balance is negotiated down and not your interest rates.  Overall, you end up paying significantly less to your creditors with this option.  This program is generally 18 to 36 months long.  The negative aspect of this program is that it affects your credit and you will receive collection calls.  In order for a creditor to settle, you must be delinquent on your accounts.  In most cases you need to be delinquent as least 4 months before you can settle and creditors will continue calling you until you settle with them. You can try to settle yourself or pay a company to settle for you.  By utilizing the right company, they can get you lower settlements and makes sure all your accounts are closed out properly, but they charge a fee.  Although this affects your credit, it does not show up as a bankruptcy or third party intervention.  It is generally easier to repair your credit once you complete the program. 

Bankruptcy - This is a last resort option that is never recommended unless absolutely necessary.  There are two types of bankruptcy, Chapter 7 and Chapter 13.  Through Chapter 7 bankruptcy, your debt is wiped clean and any debt you enroll into the bankruptcy is no longer due to the creditor.  Chapter 13 bankruptcy is where a court appointed trustee reviews your debts, income, and assets.  After reviewing your financial situation, they will set you up on a program to pay back the creditors.  This is generally a 5 year program.  Bankruptcy laws changed where it is more difficult to file for Chapter 7 as opposed to a Chapter 13.  In either case, bankruptcy stays on your credit for 10 years and you can only file once every 7 years.  Once you file for bankruptcy, it is very difficult to obtain credit.  You will not be able to purchase a home for years or qualify for a car.  It is the worst negative mark that can be placed on your credit report.