Fortunately, there are a number of simple debt solutions that will allow consumers to take back control of their finances by managing their debt loads sensibly.
Consumer credit counseling is a debt solution program for those who are unable to make their minimum payments and are undergoing financial difficulties. However, consumer credit counseling programs could take up to 6 years or longer to complete and they require an individual to pay back the full principal balance of the debt that is owed, albeit at a lower interest rate. Consumer Credit Counseling Services, on average, have very high rates of client cancellation, as clients often find that the payment relief is not enough to alleviate their hardship quickly enough. Another downside is that while working with a credit counselor will not affect the credit score, it will show up on a credit report, which could be viewed unfavorably by some lenders.
Another debt solution for those who are in serious debt is to find a credit consolidation loan. These are given by lenders in lump sums large enough to pay off all of a consumer's outstanding debts at once. While this doesn't affect the amount of money they owe, it will reduce their total number of lenders to just one, and in some cases lower the interest rate. However, these loans are difficult to qualify for, and lenders may require borrowers with sub average credit scores to collateralize an asset before granting the line of credit.
Contacting a debt settlement company is one of the most common debt solution options available to consumers. These organizations have trained negotiators, who speak directly to a lender on a client’s behalf to reduce the total amount owed. Often, these debts can be reduced by roughly 50 cents on the dollar, and settlement programs can enable consumers to become debt-free from enrolled accounts in as little as 24 – 48 months. Generally, creditors will demand a lump-sum payment when a settlement is negotiated, although many creditors are also willing to structure settlements over time. While it is possible for an individual to pursue this debt solution strategy on their own, there are many companies that professionally offer this service and can be much more effective in achieving positive results.
Whatever debt solution a consumer chooses, they should be aware that there are risks involved and do research on the company that is providing the service. While no debt solution process is going to be easy, there are good companies offering successful solutions that have lasting benefits.