Debt can be a good tool toward a good home, profitable investments, or a happy, quality time with the family. However, this is only true if debt is managed properly. When we let debt pile up, it can push us against the wall and push us to make wrong decisions that will hurt our credit and make our lives more difficult.
Getting rid of debt is good but one must remember that not all programs that help you get rid of debt are made equal.
Non-profit organizations offer credit counseling to help consumers pay off their debt and manage their finances better. Experts can help you review your expenses and see how they can solve your debt problems.
Pros – Most of these credit counseling sessions are offered for free. Through counseling, you will be able to learn how to properly plan an effective budget and equip you with skills so you can pay off your debt. These sessions are conducted by professionals so you know they know what they’re talking about and that you are in good hands.
Cons – Do your homework as not all credit counseling programs offer what they ought to offer. Make sure you sign up for one that is really conducted by certified financial experts. You need to be flexible as you might hear tips that are not even applicable to your situation. Be patient and stick to the plan as a lot of people drop out of these sessions.
When you consolidate your debt, you basically get a loan that can cover all of your debts combined. You then pay one lender instead of having to worry paying several lenders.
Pros – With a good number lenders providing options for debt consolidation, there’s a good chance you can get a competitive interest rate and low monthly payment. Debt consolidation is a popular solution for consumers and financial experts know the ins and outs of the game and can negotiate well with your lenders. As you get rid of debt through consolidation, you also free yourself of financial fatigue.
Cons – If you have a bad credit, chances are you will be dealing with high interest rates as lenders will base loan terms on your ability to pay. Watch out for hidden fees and make sure you know everything black and white before signing up with anyone. As much as possible, stay away from secured loans which may put your home or other assets such as your car at risk.
With debt settlement, lenders accept a lump sum payment from consumers and is generally an accepted arrangement for people with poor credit.
Pros – You end up paying less with debt settlement services. The experts that provide the service are so good with what they do that they can help bring your amount due around 20 to 40 percent less of the original amount.
Cons – This is a high risk option as not all lenders are open to debt settlement. Of course, debt settlement companies need to get paid if they are able to help lenders collect so check out the fees and do the math and see if you are really saving money. When you tap debt settlement, expect your credit score to get hit as you will not be paying creditors the full amount you owe them.
Let us tell you your options and the pros and cons of programs that help you get rid of debt. Address your debt issues today by learning more about financial management at Debt Consolidation Programs.