Debt Options
Many consumers are faced each day with greater debt burdens that quickly consume
their pay check. It can be hard to decide where to turn for help. If you are struggling
to make your minimum monthly payments on your unsecured debt call us for a free
consultation. There are many options available; which option is best for you?
What is a Consolidation Loan?
The traditional consolidation loan is where a consumer will borrow money using collateral
such as a home to secure money to repay unsecured debts. This can be referred to
as “robbing Peter to pay Paul”.
Additional Info
Consolidation loans using your home to secure the funds can be dangerous, especially
with the current housing situation. It’s better to diversify your debts in case
you encounter an unexpected hardship. If all your unsecured debt is rolled into
your home and you are unable to make the payment this can force you into foreclosure.
Consolidation vs. Debt Settlement:
Like consolidation you have one monthly payment that usually offers immediate monthly
relief. The difference is the length of time in the program. Depending on the amount
of your debt a settlement program will range from 12-36 months or less. Unlike consolidation
loans that range from 7-10 years or more. And if you do encounter an unexpected
hardship we are able to modify your program.
What is Consumer Credit Counseling/Debt Management?
Consumer credit counseling agencies like debt management programs help people repay
their debts by negotiating the interest rate to a lower amount.
Additional info:
Many of these agencies claim to be non-profit. Don’t be fooled they do get paid
on behalf of your creditors. Both programs aim at getting the debtor to repay all
debts in full. The programs range anywhere from 5-7 years or more depending on the
amount of debt. In essence you are working with companies that put your creditors’
best interest first
Consumer Credit Counseling/Debt Management vs. Debt Settlement
Depending on your situation, Consumer Credit Counseling/Debt Management programs
may be a viable option. However if you are looking to satisfy your debts in a short
amount of time, debt settlement is a better solution. Instead of repaying your debt
in full AADSC will negotiate the amount of your debt instead of your interest rate.
The length of the programs with debt settlement will range depending on the amount
of debt you have.
What is Bankruptcy?
There are two types of personal bankruptcies. One is a Chapter 7which is the least
desirable credit wise. Typically you are out of bankruptcy in 6 months and you don’t
have to repay any debt. The other type of bankruptcy is a chapter 13 where you are
given up to 5 years to pay off your debts. Keep in mind that the bankruptcy laws
have changed making it more difficult to file. For more information you can visit:
www.usdoj.gov/ust/eo/bapcpa/20061001/bci_data/median_income_table.htm
Additional Info:
There is just no easy way to get out of debt; you have to face up to the consequences.
A bankruptcy is not always the answer, as the effects are long lasting.
Bankruptcy vs Debt Settlement
Most people no longer qualify for a Chapter 7, so if you have to file Chapter 13
which will require you repay your debt in full it doesn’t make sense that your credit
will be affected for 10 years from the date of filing. Debt settlement will allow
you to satisfy your unsecured debt through negotiation. Once you complete the program,
we provide the tools and education to becoming credit worthy without your credit
rating being affected for 10 years.
What Solution is best?
There is just no easy way to get out of debt; you have to face up to the consequences.
No matter which option you choose, it will require a commitment on your part. A
bankruptcy is not always the answer and should
be your last recourse.