Debt Relief: Get out of Debt!

We can all agree that being in debt creates an environment of stress and pressure. Families that find themselves in this position have arrived here for a variety of reasons but no matter what circumstances have brought you to this place, if you are now ready to take action and find a debt solution that's right for you, SmartQuote.com can help.

Start this process by honestly assessing your personal finances and prioritizing your goals. Once you understand your situation, you can pick a debt relief option that will fit. Review and evaluate the following options.

#1) Do you have good/perfect credit or equity in a home?

If you own a home with equity, a Secured Debt Consolidation Loan may be the best option for you. Essentially, you would be borrowing money against your home to pay off your creditors. A home equity loan of this type comes with pluses and minuses. The plus is that you can wipe the slate clean quickly by consolidating your debt into a single monthly payment, often with a lower interest and payment amount. The minus is that you are converting the status of your unsecured debt into a secured debt. This means you will no longer have the option of discharging this debt amount in the future, should your circumstances change where you can no longer make your payments or worse yet, have to file bankruptcy.

#2) Are you willing to make a considerable monthly payment to avoid going to collections?

If you let your debt get away from you but still find yourself in a position to pay down your debt through a budgeted, agreed upon term and amount, Consumer Credit Counseling Services (CCCS) may be a good option for you.

CCCS companies provide a wide range of services that include financial planning, budget counseling, and Debt Management Plans (DMPs). The CCCS would work on your behalf to secure a new payment amount with each of your creditors, often at a lower interest rate, and without the threat of being sent to collections. You would then pay one total amount each month directly to the CCCS and from that total; they would distribute funds to your creditors at a newly arranged payment amount. An obvious benefit to this option is that you are hiring a company to help you manage your debt, negotiate with your creditors, and keep you on track. The downside to this option is that CCCS may not be able to reduce your monthly payments enough to improve your situation and you are entering into a somewhat long-term repayment plan (on average a DMP takes up for 5 years to pay off). Another possible detraction to using a CCCS is if you’re looking to make a large purchase during your DMP, such a buying a new car, home, or paying college tuition, you may have trouble obtaining a loan.

At SmartQuote.com, compare Consumer Credit Counseling Service Companies

#3) Do you want to get rid of your debt quickly, in a lump sum settlement, but forego a favorable credit rating?

Debt settlement firms are an option for people who want a speedy resolution to being in debt and who also want a lower monthly payment to get there. Instead of making monthly payments directly to your creditors, Debt settlement firms negotiate a lump sum settlement for less than the full amount that you owe. The time frame to complete this kind of settlement program typically runs between 1-2 years, which helps debtors get on the path to financial health that much sooner. The obvious problem with using Debt settlement firms is that your credit will be adversely affected. Since you are not making timely payments to your creditors, you will still be exposed to their collection calls, letters, and lawsuits. Once your settlement is paid off, however, you can begin repairing the damage to your credit over the next several years.

At SmartQuote.com, find the right Debt Settlement Firm for you

#4) Are you unable to afford any monthly payment right now & if so, is bankruptcy the answer for you?

Bankruptcy is typically a last resort for most families in debt. It is the ultimate form of debt relief, but not really considered debt consolidation.

If you choose this option, you will be free of the strain that your debt has put you under but you will also have to deal with the long-term repercussions of this decision. Chapter 7 bankruptcy is a liquidation of your assets and liabilities. Chapter 13 bankruptcy is where you repay a portion of your debts over approximately 5 years. Either way, your credit will be damaged for at least 7 years following. It is advisable that you meet with a qualified bankruptcy attorney to determine if this is the right debt relief option for you and your family based on the choices that are available.