Debt is something that many American consumers deal with on a regular basis. By the end of 2009, Americans had accumulated $2.449 trillion in credit card debt, according to the Federal Reserve Bank. For people who find themselves overwhelmed by debt, there are several debt solutions available to you in the form of financial professionals and financial organizations.
Debt Consolidation
Consolidation is the act of taking several high interest credit card accounts and bringing them all under one low interest rate loan. You not only lower your monthly payments, but you also reduce your interest debt and eliminate all but one monthly service charge. Ask your local bank or lender if they offer debt consolidation services. Some financial organizations specialize in debt consolidation. A debt consolidation organization will normally charge a monthly fee for its service that is rolled into your monthly payment. Before signing an agreement with a debt consolidation organization, check with the Better Business Bureau to see if there are any complaints against the company. You can call your local Better Business Bureau office, or use the Bureau's website for an online search.
Debt Negotiation
Debt negotiation is when the consumer negotiates a payoff amount on the credit account, and then the creditor will put the consumer on a payment plan to pay off the account. Debt negotiation can be something you do yourself, but you can also hire a professional to negotiate for you. A professional will charge you fees for his services that can include set-up fees and monthly administration fees. You pay your money to the debt negotiator who then pays your creditors, and the monthly fee is added into that payment. When looking for a debt negotiator, check with the bankruptcy attorneys in your area as some of them may be debt negotiators, or they can refer you to a reputable negotiator.
Debt Counseling
A debt counselor, or credit counselor, is someone you work with to help get your monthly obligations under control. The counselor will help you come up with a monthly budget plan, and then you work together to make sure your payments are made. In some cases you will pay money to the counselor and he pays your bills each month, or you follow the counselor's plan to pay your bills on your own. Counselors can also help negotiate debt and can refer you to a reputable consolidation professional. A credit counselor will normally charge you a fee to help develop your plan for you and possibly a monthly administration fee for plans where the counselor makes payments for you. To find a reputable credit counselor, you can check with the website of the National Foundation for Credit Counseling.
Bankruptcy
Bankruptcy can be an extreme debt solution, but it is not as intimidating as it may seem, according to accounting expert Neil E. Colmenares writing for "The CPA Journal" website. You should consult a bankruptcy attorney about the details involved in filing for bankruptcy. But you should also keep in mind that you do not need to be completely broke to file bankruptcy, you will still be able to establish credit after a bankruptcy and you will be able to repair your credit enough to finance an auto or home sale. A bankruptcy stays on your credit report for 10 years, but it is possible to repair your credit before that 10-year period is up and benefit from the lessons that bankruptcy teaches.
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