Debt Solutions to Reduce Debt

With a volatile credit market it is hard to know when exactly you may run into debt problems. It can happen to almost anyone, no matter how large an individual'income may be. There are several ways to recover from bad debt or to make monthly payments more manageable.

CCC

Consumer credit counseling (CCC) is a form of debt counseling that helps educate consumers on how to avoid debts that can no be repaid. Having CCC guidance can help you lower your monthly payment as well as lower your interest rates and remove late fees from your account. CCC usually gives you a payment program that requires you to pay back a monthly amount of about 2.5 percent to 3.5 percent of your debt balance. Although this may not be lower than your current monthly payment, obtaining lower interest rates through a CCC may allow you to pay off your credit debt faster than was previous possible with high interest.

Debt Negotiation

Obtaining help through a third0party debt settlement agency is a way to negotiate better pay-back options for the consumer as well as lowering the amount required to pay back. Debt settlement agencies can negotiate a much lower monthly pay-back plan than a CCC, which usually allows the consumer to pay off their debt in a three-year period. Unlike a CC however, debt settlement will hurt your credit report, but getting the debt off your records will allow you to rebuild your report quickly.

Bankruptcy

Bankruptcy is a last resort for debt management. Bankruptcy allows you to erase your debts completely by legally stating that you cannot ever pay back your debt. Bankruptcy requires that you disclose all of your finances, debts and a record of your assets to the court. Chapter 7 completely wipes out your debts and all of your assess are liquidated to pay off as much of the debt as possible. Chapter 13 requires you pay back the debt over a long-term period and reorganizes your finances. Bankruptcy completely ruins your credit report, which takes years to recover from. Only consider bankruptcy under the guide of an accountant.