Debt Solutions

With jobs disappearing at a record pace and employers laying off  personnel in record numbers, many out of job consumers find themselves looking for debt solutions.

Following are some of the most common debt solutions currently available to those in debt:

1. Credit/Debt counseling - probably one of the first places you should seek when you find yourself getting behind id debt. Doing so can often prevent you from getting even deeper into trouble. What these services basically do is to teach you how to handle your money. Specifically, you'll learn how to budget and live within your means. In addition, part of the budgeting process will consist of learning how to set up a plan to pay off your credit card debts and other loans and regain control of your financial life.

2. Debt consolidation - hundreds of debt consolidation companies have sprung up across the nation in the last ten years. This is one of the more profitable businesses around. Debt consolidation consists paying an intermediary company or service a lump sum of money each month. They will then use this sum to pay off all of your creditors for the month. The advantage to you is that you no longer have to keep track of individual bills. You simply pay one bill and forget about it. The disadvantage is that many companies require you to take out a loan to assist in the payments. And in the end, you will wind up paying more money a=cumulatively than you would if you were to have simply stuck to your regular payments directly to your creditors.

Nevertheless, this method has indisputably helped many people who simply are unable to pay off their bills on their own. The main thing to watch out for with debt consolidation companies is the scammers. Some will take your money and basically perform no service at all for it. Before committing to any company, check with the attorney general's office in your state to see if they have filed any actions against the company in question.

3. Debt settlement - Usually this is done when you are so far behind in your payments that the possibility of your catching up is slim. Many times, creditors will be willing to write off your debt for a lump sum payment to them. You can attempt debt settlement yourself by directly contacting the creditor to whom you owe money and attempting to work out a solution. Or you can sign up with one of the many debt settlement companies who will have their debt negotiators contact the companies on your behalf. Keep in mind, however, that even though you may be able to cut your debt load significantly by this method - a write off will show up on your credit report and cause your credit score to decrease.

4. Bankruptcy - probably the last option for most people. A bankruptcy can potentially liquidate most of your debts. In return, however, your credit score is negatively affected for many years - increasing the amount of money that you will pay on any credit cards that you can get, loans and so forth. It will also make it harder to get new credit, at least for a while. But the peace of mind in not having bill collectors call you at all hours of the day may make this options well worth your while.

Garnishment Exemptions
When a creditor has difficulty collecting money from you he may attempt to garnish your wages or bank account. But there are certain garnishment exemptions which restrict how much he can take out.

Bankruptcy Fraud
Some people are is such dire debt that they purposely or unintentionally commit bankruptcy fraud in an attempt to escape.

Debt Reduction Consolidation
Many people looking to become debt free look towards debt reduction consolidation as the solution.

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