Do you have a large unsecured debt? What can you do about this? Here are all the options you can use:
1) Bankruptcy, Chapter 7:
Advantages: You can settle all debts without paying any debts! How much debt do you pay off? $ 0 (but you must pay attorney fees).
Cons: It costs money to file for bankruptcy, which will seriously hurt your credit. In addition, you may not qualify based on factors such as income and assets.
Suggestions: Consider this your last choice. Contact the bankruptcy attorney for full details. Bankruptcy attorneys often provide free advice.
2) Debt Consolidation:
This is also known as debt relief, debt management, and consumer credit advice.
Advantages: The credit loss is not a big deal, it saves you significant overall costs, and the creditors receive monthly payments, so there is no requirement from the creditors. How much debt do you pay? 100% plus annual interest of 8 to 15% for 2-6 years, the total is about 150%.
Cons: You have to close your account to pay off all debt and interest. This is usually a long time, and participating in such programs does not allow you to qualify through many loan programs.
Recommendation: If your credit rating is perfect or near-perfect, and it is very important to you in the years to come, and your credit card rate is above 20%, it is worth considering this plan.
3) Bankruptcy, Chapter 13:
Advantages: Pay off all debts. Help those who are making too much money and not eligible for Chapter 7 bankruptcy protection. How Much Debt Are You Paying? It depends on your income and ability to pay, and attorney fees. Cons: The federal government takes over your finances and decides who and when to pay you! Hold your credit for 7 years from the date you pay off all payments.
Suggestion: Talk to a bankruptcy attorney. In a few cases, Chapter 13 is the wisest decision. Consider other options first.
4) Do nothing. Make two and three payments:
Also known as strategic payment plan, budget, snowball, etc.
Advantages: Debts can be paid off faster without losing credit. How much debt do you pay? All your debts + expenses (despite the shorter term).
Cons: It can be very expensive, especially in the short term. Many people cannot afford this method.
Recommendation: This strategy is very effective if you can afford to pay more than the monthly minimum amount.
5) Debt settlement:
Also Known As Debt Relief, Debt Control, Debt Negotiation, Debt Mediation, etc.
Advantages: The debt can be paid off faster and the debt is about half of the debt. There is a flexible payment plan (unlike all other options). How much debt do you pay? It usually accounts for about half of your total debt.
Cons: If your current reputation is good, your reputation will be seriously damaged. Telephone calls from creditors and beneficiaries can continue according to procedures.
Recommendation: If your minimum payment is much higher than your ability to pay and standard of living then this is a good choice.
6) You just don’t have to pay anymore:
Also Known As: Do not answer the call. Advantages: you pay much fewer bills! (At least for now). How much debt do you pay? You don’t have to pay any fees now, but if you get sued, you may be forced to pay more later.
Cons: Serious credit loss. Continuous credit call. You can be sued, your salary will be confiscated / assets confiscated.
Recommendation: If you have temporarily suffered a massive loss of income and your creditors cannot work well with you, it is better to stop paying than to become homeless and repay the debt. Don’t take risks with secured debt such as mortgage debt or car loans! Once your finances recover, consider a different approach. Make sure to use your money first. You must eat before you can pay for your credit card.
7) Cooperation with creditors:
Also called: do it yourself. Advantages: No need to hire attorneys or fees for debt relief. How much debt do you have to pay off? It depends on your level of success (results may vary).
Cons: Many creditors will not negotiate with individuals to consolidate debt. Working with collectors is very frustrating and time-consuming. If you miss a payment, developing a payment plan with the payee will lead to lawsuits.
Suggestion: It is best to hire a professional who will actually save you money, more than what you save yourself, including their expenses. You also save a lot of time and frustration. If you want to try things, do your research first.
Most importantly, before choosing an option, you should carefully consider all options. Bankruptcy should be the last option. Choose a wise choice as this can make a big difference. If you choose the right path, you can pay off your debts quickly.