Many people want to know where to find debt relief help. However, a lot of them never find it, and end up filing for personal bankruptcy. Do not make this mistake, if you want to get out of debt, help is available.
If you have considered filing for bankruptcy, just remember that this is not the easy way out a lot of people believe. It negatively impacts your FICO score for seven years. Therefore, it is almost impossible to get decent financing for a long time after filing. Here are two actions you should take that will help you avoid bankruptcy:
#1) Credit counseling
This is not a home equity loan-it is a much better option. Here, you hire a company that will basically manage your money for you. Instead of you keeping track of your payments, and when they are due, you just pay the credit counseling company a fixed amount every month. They will then pay the creditors for you.
This just helps you organize your finances better. Often times forgetting a payment can result in extremely high late fees, as well as negatively impacting your FICO score. This will help you avoid this problem.
Will credit counseling net you better financing terms? It really depends on how bad your financial situation is. If the creditors determine you are still capable of making the full payments, they will not let you off the hook. However, if it is clear that demanding the full payment will unduly tax you, they will often be willing to negotiate a little.
This option is best if you can make your full payments (or close to them), but you simply have difficulty keeping track of them. If your debt problems are out of control, than this option will not do you any good.
#2) Debt reduction
This is the last debt relief help option before bankruptcy. Quite simply, this is where you essentially hire a company for the purpose of getting you better terms on your financing accounts. They will negotiate with your creditors to drop the interest rates, and sometimes to extend the repayment period. Both these factors will in effect lower your monthly payments, which will make things much easier.
However, remember that this will drop your credit score significantly. Quite simply, you are basically admitting you are incapable of repaying your dues. Therefore, other companies will assume you might make the same mistake later on, and avoid you. However, debt reduction is not as bad as bankruptcy for your credit score.
This option should only be done if you are in over your head, and have no way of making the full payments. If you are able, you should do credit counseling instead. It will not have nearly as much effect on your credit score.
The bottom line-your options are either to take one of the two steps listed, or do nothing at all. Many people wait until it is too late to take action, and then have to file bankruptcy. However, when you take control before it is too late, you will limit the damage caused to your credit score, and will save yourself a lot of trouble down the road. Either credit counseling or debt reduction is where to find help with debt problems.
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