Other Options For Debt Relief
While debt negotiation remains the most popular option for those who need help with their credit card situation, some people who aren't in too deep may be able to utilize debt consolidation as an alternative. On the flip side, those who's financial situations are in more dire straights might be forced to consider bankruptcy:
Consolidating Your Debt:
Consolidating can be a great way to deal with high interest debts without hurting your credit, but a lack of security to put up means it's not an option for many people in debt today.
- Traditional debt consolidation normally requires some sort of collateral (like a house) in order to secure a low-interest loan on which to consolidate the debt.
- "True" consolidation is often confused with settlement/negotiation, as many settlement companies will collect a single payment from clients after enrollment to distribute to creditors. This technically consolidates the payments - but not the actual debts.
For more information about debt consolidation click here.
Declaring Bankruptcy:
Bankruptcy can be a necessary thing for a small percentage of the population, but many people file for bankruptcy that really shouldn't have. The federal government has recently changed our bankruptcy laws to tighten up restrictions.
- Not all debts qualify for bankruptcy, you will still have to pay child support payments, debts caused from a criminal act, debts caused by malicious injury to another person or their property, credit card purchases made within 40 days of filing for chapter 7 bankruptcy, and student loans.
- Chapter 7 bankruptcy stays on your credit record for 10 years
- Even after the 10 year period expires, your credit rating will be poor as you will have no credit history for the last 10 years.
Other then the financial effects of declaring bankruptcy, many people also experience emotional problems and an increase in stress. For more information, read our page on life after bankruptcy.
Credit Counseling:
If you're unsure about your available options (or even if you are), you might want to consider speaking with a credit counselor for more practical tips and advice on dealing with your debts.
