A debt settlement program is the fastest way to becoming debt free at the lowest cost and greatest savings. But before you decide on such a program, let’s make sure you are aware of the traditional options to getting out of debt…
Option 1 (the Best Option): Debt Settlement Program
This is typically the best option if you are finding yourself behind on payments, or if you are just paying the minimum payments.
Why choose a debt settlement program?
- Become debt free fast
- Avoid bankruptcy
- Pay back only a fraction of what you owe
- Affordable monthly payment
Option 2: Debt Consolidation (Second Mortgage)
If you are a home owner and you qualify based on debt-to-income ratio, credit score, and equity, you could take a second mortgage out on your home. However, let’s evaluate this with some common sense. First of all, the debt is not going away, it’s just transferring from unsecured debt to secured debt. Now if you can’t afford the new mortgage payment or lose your job, you risk losing your home. Not to mention if you have been paying down your home loan the last few years, you’ve just set the clock back to zero. Although you no longer have any more credit card payments, you now have a larger mortgage payment, for a much longer period of time. What this does over time is forces most people to get into even more credit card debt, and repeat the process all over again. About the only person that will ever get ahead with this method is your loan officer!
Option 3: Do Nothing (continue to pay the monthly minimum)
You can continue to keep doing what you’re doing and just pay the minimums or a little over the minimum payment on your credit cards. This is exactly what the creditors hope you do! They will do just about anything to make sure you just keep paying the minimum. Your money is being sucked into a compound interest sinkhole. By paying only the minimum, your debt will more than double and take decades to finally pay off. Why do you think they offer the “infamous” 0% balance transfer! Before you even think about doing that make sure you read all the disclaimers about balance transfers and get a full understanding on how credit card compounding interest will drastically increase your debt. Reference page 1 to see how much your debt will grow and the decades of payments you will have to make if you choose to continue making the minimum payments.
Option 4: File for Bankruptcy
If you qualify for bankruptcy you would either have to file Chapter 13 or Chapter 7. Keep in mind any Bankruptcy you file will completely destroy your credit for 7 to 10 years! And this will be on public record for life! This means a background check by a potential employer will show your bankruptcy which may result in someone else getting your dream job. Or if you want to start a business or buy a new home, your lender will know about your bankruptcy before deciding if they will lend to you. Additionally, because of the new bankruptcy changes, you may only qualify for chapter 13 which will give you similar results as our settlement program but will have much harsher consequences on your credit.
Option 5: Consumer Credit Counseling Service (CCCS)
This is often confused with debt consolidation – option 1 above. Credit Counseling Programs are non-profit programs that will negotiate the interest rates on your accounts. You will make one monthly payment to them, and then they will disburse the payment to your creditors for you. Depending on your debt amount, you could be debt free within 4-7 years. The only problem with those programs is that they claim to be Non-Profit; however, they are sponsored AND paid for by the creditors themselves! Whose best interest do they really have in mind? Also, because you are in a debt management program, the credit bureaus have to report that you are in that program. That will have a detrimental effect on your credit until you are out of that program (4-7 years) sometimes even longer! And you WILL pay back 100% of your debt plus interest! In order to do that within 4-7 years, you will find that your new monthly payment is about the same or more than what you were paying before getting into that program! Also, if you miss even one payment, they will keep the first month payment that they hold and can kick you out of the program at their discretion. Lastly, 85% of people that enroll in a CCCS program will drop out and never complete the program!
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