Debt Advice…Where To Find The Good Stuff

 

Is there any new debt advice that can be handed out? Unfortunately, no. The same options are around, each with pluses and minuses, and really nothing new is on the horizon. If you owe money to credit card companies, you will have to pay it back one way or another, or in the case of bankruptcy (chapter 7), your credit score will take a huge hit.

Of course the best debt advice is not to get into debt in the first place. Doesn’t help much if you are already in over your head. So what do you do if you are in credit card trouble? Let’s examine the various options and the pluses and minuses of each.

Debt Counseling

Debt counseling is the process of hiring an outside firm to be the go between negotiator between you and your creditors. The counselor will work with your creditors to reduce or eliminate sky high interest rates to give you a fighting chance in paying back what you owe. Once a deal has been worked out, the counselor will receive a monthly payment from you that will be used to pay your creditors. This can be a great way to get yourself out from under the crushing weight. Be aware however, many non-profit debt counselors are actually employed by the credit card companies. They can be kind of expensive, and take their percentage before payments go to the credit card companies.

Debt Settlement

With debt settlement, you or a negotiator works with your creditors to reach a settlement of a percentage of what you owe. Many times 50% or less. This amount will have to be paid in a very few if not just one payment. You also have to be behind on your credit card payments or the companies won’t even consider a settlement. This is a good way to eliminate your balances for a fraction of what you owe, if you can pull it off. Thousands do, and very successfully. Your credit score will take a hit, not as bad as the next option though, which is:

Bankruptcy

With bankruptcy, you wipe all your debts clean and start anew. Your credit score takes a major hit, and you may find it hard to secure a loan for a few years, or will have to settle for a loan with higher interest rates. There are two main categories of bankruptcy, chapter 7 and chapter 13. Both have their good and bad points, depending on your situation.

Again, the best debt advice is not to get into debt at all. Pay off your cards every month, or better yet, use a debit card or no card at all.