There are several methods available to the consumer to consider when trying to get out of debt.  These methods are:

·         Try and manage their current debt themselves – in other words tighten their belt and spending habits.

·         Debt consolidation loan – this would combine all outstanding unsecured debt into a single payment loan. The problem is can the consumer qualify for a new loan with no job or financial hardship issue.

·         Refinance or Home Equity loan – This might work, if the consumer has enough equity in their home, however the repayment may be an issue.

·         Credit counseling service – This program acts like a debt consolidation loan. The consumer pays a third party company who in turns pays a small or set percent each month to the lenders until all the balances are pay off. In addition, there is credit counseling for the debtor and this will also have an affect on your credit score.

·         Bankruptcy – This is the most serious and the final step that a consumer should consider.  The consumer needs to discuss with an attorney all facets of bankruptcy since it will cover all debts, both secured and unsecured.

·         Debt settlement – This is a program by which a third party negotiates with the lender in order to reduce the outstanding balances on unsecured credit cards.

Debt settlement is one option available to the consumer as a way out of their financial hardship.  Debt settlement deals with unsecured credit.  This unsecured credit can take the form of credit cards, medical bills and any other unsecured debt the consumer has incurred.

The consumer needs to realize there are two types of credit available to them. Secured credit means debt has some type of collateral backing -  your home, your car or in some cases, cash secured loans. The other form of credit is unsecured which is normally credit cards from lenders or retailers.

The unsecured credit is where the consumer has caused the majority of their financial problems.  The consumer has used credit card to purchase daily expenses, like their  groceries, gas, airline tickets, and on-line retail shopping. The credit card companies would offer points to the consumer to purchase items and give them reward points or points toward travel. In addition, the credit card companies would offer us new credit from higher interest rate cards to lower interest rate cards, if we transferred the balances.  It was like a shell game, moving balances from one card to other which allows us to have more credit.

 The one way to get out of debt is to look for a debt settlement company.  Debt settlement may not be for everyone. It requires the consumer to start saving money monthly until enough monies are available on the lowest outstanding balance credit card before the debt settlement company to begin negotiations.

Yes, there are drawbacks to this approach as there is to other options.  This is not an overnight fix it may take anywhere from 12 to 48 months. However, the first step is to discuss with a debt settlement company the ways in which they may be able to assist you out of debt. But if the consumer is really wanting to do something and get out of this financial hardship, call us today to discuss your options. 

People in this country are in debt.  I get asked questions all the time about negotiating credit card debt.  Now I am getting questions about negotiating on a car loan.  For starters you can negotiate with credit card companies once your are behind on the bill.  Credit card debt is unsecured debt.  Car loans are different.  A car loan is secured by the asset, the car.  If you quit paying on your car loan, the repo man will come and get it.  My suspicions are that they are getting more car repossessions now more than ever. Continue Reading »