Safe Debt Relief

In these difficult financial times, it's easy to get caught up in the quagmire of credit cards and other debt. You owe money on your car, on your home, to merchants and anyone else that will take a dollar. This is a nation of spenders, and occasionally, you get in over your head. However, you can eliminate both secured and unsecured debt.

Unsecured Debt

Unsecured debt is that which is owed to collection agencies, on medical bills, on credit cards and anything else that isn't a structured loan. You can go to creditors directly and talk about your debt. Credit card agencies often are willing to settle for less than what they are owed--called a charge-off--but your credit rating will take a hit. Hospitals have programs in which they can forgive charges based on income and other factors. Collection agencies just want their money.

The other route is an accredited credit counseling agency, which will contact your creditors and negotiate smaller or no-interest balances and set up one monthly payment. The goal is usually to be debt-free in three to five years. One should be wary of credit counseling agencies that charge you large fees and do not negotiate lower payments from your creditors.

Secured Debt

When it comes to secured debt, fewer avenues are available. You can try and negotiate with the lender to lower your interest rate or extend the loan, but they are under no obligation to do so. In fact, predatory lenders may count on you getting behind as a way to take your property and sell it for profit.

If working with the lenders has not worked out, the other option is bankruptcy. Whether Chapter 11 or 13, the goal is to wipe your debt clean and give yourself a fresh start. You may lose some property in the deal -- and keep in mind that in most cases, bankruptcy provides no relief from taxes or student loan debt -- but it will reduce your debt significantly. Bankruptcy should be a last option as it will severely hurt your credit score and will be on your credit report for seven to 10 years.