Debt Consolidation, Bankruptcy or Debt Settlement?
Consumer debt…how would I love to pay the off! Let me count the ways…
We live in a culture where the burden of consumer debt has not only become acceptable but even expected. Since the average household in America carries nearly $9,000 of credit card debt, a large percentage of American households are looking for the best way to pay off their debt. Here are descriptions of three, including the service that Debt Reduction Services Inc. provides (Debt Consolidation):
- A Debt Consolidation Program helps you pay off dollar-for-dollar what you owe, but generally at better interest rates and monthly payments. A notation on your credit report that you are participating in Debt Consolidation (which usually prohibits you from getting a new credit card) is typically removed upon completion of the program. Debt Consolidation Programs generally take 3-f years to complete. There is no direct impact on your credit report.
- Debt Settlement Companies (or “Negotiators”) try to work with creditors to lower the amount you owe. Even when successful, you’re still likely to pay about 80% of the original dent due to fees and taxes. Resulting account “charge offs” negatively affect your credit score for up to 7 years.
- Bankruptcy, generally considered the last of all debt-relief options, can protect your assets from creditors and may remove your obligations to pay your debts at all. You would still generally be required to pay certain types of debt, such as government student loans, fines and child support. Bankruptcies stay on credit reports and negatively impact credit scores for 7-10 years.
If you have any questions, would like to discuss your financial challenges, or are just looking for advice, please call us at your convenience. As always, we are here to help and look forward to hearing from you.
1-877-688-3328
Debt Reduction Services and the National Financial Education Center
Financial Educator, Facilitator, Lecturer, Speaker
A Certified Personal Financial Counselor, Todd Christensen, M.A. is Director of Education for the non-profit National Financial Education Center at Debt Reduction Services Inc, served as President of the Idaho Financial Literacy Coalition from 2006 until 2009, and was asked in 2009 to serve on the Council for Certification of the American Association of Family and Consumer Sciences.