If you find yourself swimming in debt, a reputable debt consolidation expert can give you timely advice on getting your debt under control. The expert will interview you and offer a solution that best fits your debt situation. To find a reputable debt consolidation expert, check with your state's Attorney General or the Better Business Bureau.
Develop a Budget
When you meet with a debt expert, one of the first things he will suggest is for you to develop a personal budget if you have not already done so. The counselor can help you analyze your earnings and expenses and develop a workable spending plan; he can help you find areas where you can cut expenses.
Debt Consolidation Programs
A debt consolidation expert may work for a company that offers a debt consolidation program to help you get your debt under control. A debt consolidation program allows you to combine your unsecured debt, such as credit cards and personal loans, into one affordable monthly payment. You make monthly payments to the debt consolidation company who in turn makes payments to your creditors. The debt consolidation expert may be able to negotiate with your creditors for a lower interest rate or a reduction in penalties. A debt consolidation program may significantly reduce the time it takes to pay off your unsecured debt.
Debt Settlement Programs
One option a debt expert may offer as a solution to debt problems is debt settlement. Debt settlement and debt consolidation are not the same things. While debt consolidation combines your unsecured debt into one monthly payment; debt settlement is a negotiation with creditors to accept an amount less than what is owed to pay off your debt. Normally, to be eligible for a debt settlement program, you must be more than six months behind on your payments. In a debt settlement program, the company holds your money until enough money has accrued to pay off your debtors individually. This could sometimes take months or even years and damage your credit even further.
Bankruptcy
Bankruptcy should be considered as a last resort to handle out-of-control debt. This should only be considered after all other avenues and resources have been exhausted. Bankruptcies stay on your credit report for several years and may make it difficult to finance vehicles or purchase a home. A debt consolidation expert may suggest bankruptcy if you have severe debt delinquency. Filing for bankruptcy stops collection efforts from debt collectors once the initial bankruptcy papers have been filed.
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