Credit Debt Elimination

When collectors start calling and the mailbox is full of dun notices each month, the average consumer starts to panic. Clearly, they are mired in debt, and all they can think about is credit debt elimination. There are practical approaches to the situation but they need to be thought through and assistance may be needed.

Many people go into something of an ostrich mode. They put their head in the sand, and hope that it will all go away. It is highly unlikely that creditors will just forget that balances exist, and the best approach is to face the situation head on. Many consumers feel that their only option is bankruptcy, but that is an extreme measure and one that has lasting effects. Credit is ruined for up to ten years, and while the new laws make it harder to declare bankruptcy, it also no longer means that everything is just erased. The courts are working differently these days, and bankruptcy can mean loss of property. It can also take a huge financial toll.

There's another way to stop paying the monthly bills, and make it work out better. That's through signing up for a debt settlement or debt management program. These are also known as lump sum negotiations. The way it works is that the consumer does make a monthly payment, but into a special account set up by a debt resolution company. Once the money is amassing, it has been some months, and creditors are beginning to think that a consumer will declare bankruptcy. That's when professional negotiators start to talk with them, and eventually the lender will agree to a lower principle balance. It is something of a buyout. These negotiations can see percentages knocked off balances and they range anywhere from 10% to 50% depending on the amount of debt.

Credit debt elimination isn't free. The consumer is paying off part of the principle and will also pay fees to the debt resolution company. There is considerable debate about how much debt relief costs these days, but if thought about logically, what's provided to the consumer is valuable. Good negotiators aren't free and neither is the management of an account. Many companies also provide legal advocacy for consumers who are being harassed by bill collectors. Opponents of debt relief companies will say their fees are too high, but if referenced against the costs of attorneys and CPAs in the case of a bankruptcy, they are a bargain. If nothing else for peace of mind and the ability to get a consumer back on their feet again.