August 25th, 2011 7:37 PM by Korene L Clopine-Seaman
If you feel like you're in over your head with personal debt, you're not alone. Millions of Americans have become overextended, many as a result of easy credit and the recessions. Credit cards, medical bills, personal loans, and raising interest rates do not make a good financial mix.
The five strategies you may want to avoid:
The first piece of advice from experts in the field is to be sure you don't make your situation worse by making common mistakes. In particular:
Debt Settlement or Bankruptcy?
Two common solutions people turn to are debt settlement and bankruptcy. Generally, if you are struggling with a financial hardship and are behind or falling behind on your minimum payments, then debt settlement may be right for you. If your situation is more dire, then you may consider bankruptcy.
However, bankruptcy is a serious step with long term implications for you and your financial future. Most experts would suggest it only as a last resort. The better course of action is to attempt to work through your debt issue with your creditors, and this is where debt settlement companies can help.
What is Debt Settlement?
You may have heard companies advertising recently that they can settle your debt for less than what you owe. Is this process legitimate?
Working with a debt settlement company could actually be a great solution for many people struggling with a financial hardship. Debt settlement is the process of negotiating with your creditors to get them to reduce a potion of your debt. Specialty settlement companies determine a reasonable monthly amount that you can afford to pay, which is based on total amount owed. You make your affordable payment every month into a special purpose account, and as these funds accumulate, the settlement company reaches out to creditors to negotiate a final actual settlement amount for you. Typically these companies have excellent relationships with creditors and are negotiating on behalf of thousands of people every day.
So, how do you find a legitimate and trustworthy debt settlement company to work with? A great way to start is by visiting Freedom Debt Relief for a free, no-obligation consultation to evaluate your options.
To learn how much of your debt can be reduced, click here.