Evaluating Your Debt Relief Options - Personal Finance Solution

If you are deep in debt, struggling to keep up with the monthly payments, and are looking for answers, you should know that there are a lot of debt relief options available to you. The hard part is determining which one is the best for you.

The typical debt relief options include bankruptcy, credit counseling, debt management, and debt negotiation. If you haven?t already started learning about these options, than you probably have no clue which of them might be best for your unique situation. Fortunately, there?s an easy wat to figure it out. This is accomplished by evaluating your debt, your ability to pay it, as well as the relevant interest rates.

To begin, develop an estimate of the amount of debt you hold. Then you?re going to categorize this debt as one of two types: secured debt or unsecured debt. A secured debt is debt that a creditor holds collateral in (i.e., home mortgages, car financing, etc.). To the contrary, an unsecured debt is debt in which your creditors hold no collateral (i.e., credit card debt, medical debts, etc.).

After you have figured out the amount of debt you hold and have determined whether it is secured or unsecured, then you can continue forward. At this juncture, you must analyze the interest rates on your debt, the rate at which they compound, and how long it will take you to pay them off, if ever. When examining the numbers, you should then ask yourself, ?is it possible to eliminate my debt by making the minimum payment each month?? If the answer is yes, then the best debt relief option for you may be credit counseling or debt management. Under these options, you typically get that smidgeon of assistance that you need to keep up with your payments while not struggling elsewhere. This help would be in the form of decreased interest rates or reduced monthly payments. On the other hand, if you answered, ?No,? then you are probably in need of more heavy duty debt relief option.

If you?re thinking about why you had to sectionalize your debt into categories of secured and unsecured, here comes your answer. This categorization becomes important now as it can mean the difference in settling your debt at a reduced rate ? or filing bankruptcy. If most of the debt is unsecured, can probably avoid bankruptcy by negotiating a debt settlement with your creditors. However, if most of your debt is secured, your creditors are not going to negotiate, and you?re probably going to need to file bankruptcy.

After taking this assessment, it should be a little more clear about the direction you need to look to find the best debt relief option for you. This is only the beginning of your debt relief research, and know that debt freedom is a long way off. Be patient, diligent, and cautious ? and trust that you will get there, eventually.

Source: http://feusab.com/?p=86122

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