Debt Relief Services to Fight Bankruptcy

bankruptcy

Getting into debt is simple to do; getting out of it is another story. While bankruptcy may be a viable option for you, keep in mind that a bankruptcy can remain on your credit report for as long as 10 years depending on which type you file. This can make it difficult to receive loans. Instead, try working out your situation first by receiving financial advice from reputable counselors.

Find a Credit Counselor

To begin, find a reputable financial counselor in your area. One of the best to go with is the National Foundation for Credit Counseling, as they provide excellent services you can use. Best of all, they have offices in all 50 states, so you are sure to find one near you.

What’s great about them is their personalized approach, as they will work with you to determine your financial situation. When you go for the meeting, it’s important you bring your most current statements from all your creditors, as well as information on basic expenses and income. From there, the counselor reviews your finances to determine your situation.

In many cases, they will find ways to help you cut down on expenses, which will leave more room in the budget for bills. Further, depending on your situation they may recommend a debt management plan.

Debt Management Plans

A debt management plan is where the counselor will develop a multi-year plan for you to pay off all of your debt. To do this, they will look at factors like amounts owed to each creditor, how much you have available for monthly payments and how quickly you can pay off each. From there, they will assign monthly payment amounts for each creditor.  Next, you will fill out paperwork and pay a deposit. Then the counselor will send proposal letters to each of your creditors.

A proposal letter will state you are in a debt management program with that counseling agency. In the letter, the counselor may ask the creditor to reduce the interest rate and eliminate late fees. It will also contain the monthly payment amount and date.  If the creditor approves the plan, you will receive a letter in the mail from them.

Now it may take several months for creditors to agree to the terms. This means if you are severely behind on one or more debts, it’s important to contact the lender and let them know what you are doing. Additionally, after your creditors accept the plan, it’s important to review each statement to make sure they are following the terms of your agreement.

It’s also important to note that a creditor does not have to agree to the plan. Furthermore, a debt management plan will not protect you from legal action a lender may take for defaulting. Therefore, it’s imperative to communicate with your creditors and to make arrangements with those that won’t participate in the plan.

Debt Settlement

Financial counseling agencies have been successful due to their expertise. They know how to offer sound financial advice so you can change your financial behaviors. You may also want to contact a debt settlement firm. With debt settlement, the company will contact your creditors on your behalf and negotiate a lower settlement amount. Often, you can get out of debt without having to pay the full amount owed.

Ultimately, bankruptcy should be the last option you consider. Before you file, it’s important to speak with a reputable financial counselor, as they may be able to help you turn around your situation without the court’s help. Considering the long-term effects, legal costs and difficulties surrounding bankruptcy, finding an alternative like debt settlement can provide you with the satisfaction of paying off your creditors while building sound financial habits for the future.

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