Pros and Cons of the most traveled debt relief avenues
We here in America are on the threshold of experiencing a credit crisis. The amount of unsecured debt has hit a record high and we are nearing what may be a recession. Thus leaving a great number individuals with less money in there pockets and more debts to take care of. In this article I will review the pros and cons of the diverse available systems of credit card debt relief.
Pros- Monthly payments are consolidated into just one, reduced interest rates, fixed payment not minimum payment.
Cons- Long term repayment, stringent program rules, most do not complete program, hard to obtain mortgage on program, payments are not very low, the creditors will kick you off the program if one payment is late or missed.
Bankruptcy:
Pros- Upon qualifying for Chapter 7 full amount of debt is discharged, the collectors cannot call and harass.
Cons- Very bad effect on credit rating, made a public record for the rest of the debtors life, change in bankruptcy law made Chapter 7 very hard to qualify for, court ordered repayment process.
Pros- Debtors can save a tremendous amount of money of what is owed, by far quickest route of getting out of debt, not made a public record.
Cons- Temporary negative effect on credit, collection calls,small chance of being sued by creditors.
Of all the debt relief routes above the the most popular nowadays has become debt settlement. However what really determines which method is right for you really depend on the current monetary predicament that you are in. For individuals trapped deep in debt but have income to pay a portion of it off then debt settlement would be best, to help escape bankruptcy. Those who have lesser amounts of debt and have no problem making the monthly minimums plus more, than credit counseling is a better course of action. However there are some people out there who have literally no choice but to go into a bankruptcy proceeding.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.
Published March 4th, 2008
Filed in Business