Debt Settlement Methods Demystified

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If you’re buried under a mountain of debt, you have undoubtedly considered what the best strategy for digging out from under that debt would be. Depending on the severity of your debt situation, you can opt for one of several approaches to repair bad credit and get out of debt.

Do It Yourself Credit Repair
If you’re debt is at a manageable level and you have the willpower and discipline to stop spending and create a repayment plan, then you may be able to get out of debt on your own. The greatest benefit of doing it alone is that all your resources can be directed toward paying off your debt and you can immediately begin rebuilding your credit score.

The do-it-yourself method isn’t for everyone, though. If you just can’t stop using your credit card or you feel overwhelmed by the idea of contacting creditors and creating a plan you can stick to, then you may need to seek outside help.

Credit Counseling
A credit counseling company will take a look at your financial situation and will help you with the details of contacting creditors, creating a low-interest repayment schedule and determining a strategy to get out of debt. If you have high levels of debt, however, credit counseling may not be enough to get you back on track. People with debt that will take many years to repay, even with a solid plan, should consider more aggressive debt strategies.

Debt Consolidation
If you have a lot of high interest debts such as multiple credit cards with high balances, then debt consolidation may be your best option. Debt consolidation allows you to take out a loan with a lower interest rate in order to pay off credit cards or other debt with high interest rates.

The down side of debt consolidation is that most loans require some sort of collateral, such as a house, that will become the property of the lender if you fail to pay.

Debt Settlement
Debt settlement companies help you negotiate with creditors in order to settle debts for a percentage of the full amount owed. Once the settlement has been agreed upon, each debt will show up as paid on your credit reports. Debt settlement is a good option for people with huge debt balances from loans, medical bills, or other unforeseen circumstances who want to avoid bankruptcy.

If you’re considering debt settlement, make sure the company you’re dealing with has a good reputation. Some debt settlement companies charge exorbitant fees and will not begin working to settle your debt until those fees have been paid.

If you’re interested in learning more about credit card solutions and how to repair bad credit, RepairMyCredit.com gives you credit repair solutions ranging from credit report repair, debt management help, and credit repair resources.

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