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Finding Relief Through Debt Management Solutions

Once you fall into the pit of debt, it can really cost you your peace of mind. You tend to lose a lot of sleep over it. But don’t worry, there are a lot of companies out there which work with you to find a way to reduce or even eliminate your debt. Here are some possible debt management solutions:

1. Debt Settlement
You’d most probably have seen ads by people who claim to have a quick – fix method whereby they’ll reduce your debt by nearly half! These are debt settlement companies, and their job is to get the creditor to accept either a lesser payment or no payment at all. However, this option isn’t recommended most of the time as you’re credit rating is bound to take a plunge, but if you’re in some serious debt, you may have no option than to take this one up!

2. Credit counseling
Credit counseling has left many people satisfied, and you’ll most probably be able to find relief more easily through this. Basically, you have to go to a credit counselor and brief him / her about your debt situation, and that you are finding it difficult to pay back your debts, and then, he / she will meet up with your creditors and draw up a debt management plan. This will offer lower interest on amounts due, or even lower payments due as creditors would at least want something from you rather than nothing at all.

3. Debt consolidation
Drowning in debt, and don’t want to get a big hole in your credit file? Then, debt consolidation is the thing for you. The basic concept behind debt consolidation is that you take out a loan from a bank to pay off all your other debts. You make one small payment per month to your bank, and they’ll use that money to pay off your creditors (who will be willing to accept a lower payment per month).This loan will always be secured against an asset in most of the cases, it’s your house, so you’ll be able to negotiate a lower interest. The biggest advantage is that you just have to make one payment, which reduces a great deal of headache. But, be aware of the fact that you end up paying a lot more in total because of the fact that the payment is stretched over a longer period of time. Moreover, you run the risk of possibly losing your house if you happen to miss a payment.

But, more importantly, debt consolidation does not give you a way to solve your main problem, which is getting into debt, and you’re encouraged to get into further debt to pay back your previous debts.

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