Debt problems can easily overwhelm people who face changing employment circumstances, health crises or poor financial self-management. The Federal Trade Commission mentions several possible solutions, ranging from counseling to bankruptcy.
Counseling
If debtors cannot manage their own debts or negotiate lower payments with their creditors directly, they may consider working with a credit counselor to develop a workable repayment strategy. Credit counselors often enroll their clients in debt management programs that involve regular monthly payments.
Repayment Strategies
Debtors may obtain a consolidation loan, using their homes as collateral, to help repay debts. Some companies offer debt negotiation programs that attempt to get creditors to accept a lesser amount, but the Federal Trade Commission warns that these programs do not always work as advertised.
Bankruptcy
In the most serious cases, debtors may exercise their right to file for bankruptcy. Bankruptcy gives debtors protection from their creditors' attempts to collect, with the debtor's assets sold by a trustee and the resulting money distributed among the creditors. Because bankruptcy tarnishes debtors' credit ratings for 10 years, the Federal Trade Commission recommends it as a final option only.
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