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Getting Out of Debt
If your monthly debt payments, excluding mortgage or rent, exceed 20% of your income, your debts are a serious problem requiring action. Here are some basic alternatives for getting out of debt:
When negotiating with creditors, you will find that some are willing to negotiate lower payments or interest rates, or waive late charges and other fees, because they realize that it’s better to receive some of the money owed than none of it. But you will have to ask yourself if you have the ability and temperament to conduct difficult, time consuming negotiations alone.
Debt Management Program (DMP)
While debt management services may save you money by working with creditors, they typically do not negotiate with creditors to pay less than the total principal amount owed. This is often referred to as debt settlement and is rarely an option recommended by a certified credit counselor except for very unique situations.
If you have a habit of buying on credit and carrying large balances on your credit cards, debt consolidation won’t fix your underlying spending problem. Also, you remain solely responsible for paying your own bills and negotiating with creditors.
Chapter 7 Bankruptcy discharges virtually all of your consumer debts but does not eliminate secured debt, so you could still lose your home if you fall behind in your mortgage payments. You also will be required to pay such debts as student loans, alimony, child support, income taxes, and legal fines. Chapter 13 Bankruptcy is used in special situations, primarily to allow the filer to keep his/her home. A court-appointed trustee oversees a strict repayment plan to pay off your debts during a period of three to five years.
Although bankruptcy may fix your short-term problems, because it stays on your credit report for so long it should only be used in extreme situations. Many people who file bankruptcy make the mistake of doing so without fully exploring their options, and never realize they have other, more viable choices that will allow them to preserve their credit standing.
Debt Elimination Program
The staff at DRES includes: Former bank compliance division experts and Resource and Financial Education Specialists who have personal experience in utilizing these procedures from start to finish. These procedures include consumer remedies based on 12 C.F.R. (Code of Federal Regulations), the Fair Credit Billing Act, which is taken from Title 15 of the U.S.C. (United States Code) and other applicable federal laws. Additionally, for people with credit concern issues, DRES provides an educational tutorial based on consumer protection laws as well as a partnership with the nations leading credit repair organization.
DRES takes a cutting edge approach into an industry which is greatly untapped. There are millions of Americans who suffer from having too much unhealthy debt in their lives. DRES offers an opportunity for people to recapture an enormous part of their personal and financial freedom by eliminating this condition.
About the Author: David Lorenson is a senior debt solutions consultant with Debt Relief Educational Services (DRES) DRES provides a program that is the #1 Alternative to Bankruptcy and Refinance. Learn how to reduce your credit card debt by 75% or more. This program eliminates credit card and unsecured personal loans legally, ethically and morally. See his website at http://www.4creditcardhelp.info. David is the author of many other related debt solution option articles.