Exploring debt relief options

The debt management program

The Debt Management Program is the highest recommendation when seeking debt relief options. This is when the consumer consolidates all unsecured debt into one monthly payment without obtaining a loan. The plan allows the consumer to include unsecured debt such as credit cards, department store cards, personal loans, medical bills, past due utility bills and several other forms of unsecured debt. All the consumers bills will then be consolidated into one easy monthly payment and often times the payment amount may be reduced. The Debt Management Plan is primarily for those whom are current on active credit card debt, that want to keep their credit score in good standing. When consumers feel as if their balances are not going down, or just want one monthly payment, that's when the debt management program may be in the best interest of that consumer. When a consumer decides to consolidate debt through a debt consolidation program, that person can remove the stress and start restoring your life.

The typical debt management program ranges from 2 to 4 years, depending on the clients situation.

Below, we will break down a few of the most common benefits to debt consolidation.

One monthly payment
	Regardless of how many bills that consumer has, this debt relief program will provide one monthly payment.
Reduced payment:
	Not only will the consumer obtain one monthly payment, but the payment amount may be lower than what their currently paying.
Debt relief much sooner:
	By having a lower payment, don't think the time will be prolonged even further. In this program, since most fees are reduced or removed entirely the overall pay off will be much sooner.
Interest, Late, Limit Fees:
	If a consumer is struggling to make the balances go down, usually due to; late, limit, finance and annual charges the debt management program would be extremely beneficial. Most of these fees are reduced or sometimes even eliminated when entering this program. This will result in a greater percentage of the minimum payment actually going toward your balances. When a consumer remains current outside this program, its usually a reversed situation and a greater percentage of the payment goes towards finance charges and fees.
My credit score:
	What happens when a consumer is current with active debts? Most people who enrolled into the debt management program are current, or at least somewhat semi current. Understand, that Credit Counseling is not factored into your credit score. Don't take our word for it, or anyone else's for that matter. The creator of the credit score, also known as a FICO score has a direct link that says so. Please click here and scroll to the bottom and what does it say?
Typical pay off:
	Anywhere from 2 to 4 years is the typical payoff. This does vary, so don't hold us to anything until you speak with one of our debt educators. Also note that the time pay off is based on minimum payments, so should you decide to pay more expect to become debt free much sooner. Program length are based on creditor type, balance, etc. The worst thing a consumer can do, is not receive a quote through one of our debt educators. Remember, the rule of thumb is that it should take two years for every thousand a consumer owes to pay back that revolving debt. Entering a DMP is only common sense.

Additional debt relief options through debt settlement

Debt Settlement is the program designed for consumers who cannot meet the minimum required payments, and want to avoid the devastation caused by bankruptcy. The clients also cannot afford the above program. Although the credit card debt consolidation program reduces payments, sometimes it doesn't reduce them enough which makes Settlement plan B. When seeking debt relief options, debt settlement can be a useful program.

The objective to the debt settlement program is to offer a cash settlement on the balances owed. In the Debt Settlement Program, the consumer would have one monthly payment that would be be built in a private account that would then be used to settle out the balances. Now don't get confused, this is not a loan. No lender would provide a sum of cash unless of course the consumer put up their home as collateral, more on that later though. Back to what we were saying, every month this balance will increase in the private account until a certain amount is met. At this point, the creditors are contacted and the amount are settled on the proposed amount. This will be done through a certified law firm servicing the accounts, American Debt Solutions does not administer debt settlement programs.

The downfalls to Debt Settlement is that the creditors go unpaid until the amount is built. If your current with credit card debt, expect creditor harassment at first. If your seriously delinquent already, then this solution may be for you. Another downside is that this program may have a negative mark on the consumers credit score if their active on credit card debt. It will show as settled for less, or something very much similar. Enrolling into Settlement is a secondary option to the above debt management program.

To clarify, debt settlement is much better than bankruptcy.

Sell an asset to repay debt

If a consumer can sell an asset to come upon a large sum of cash, this would be recommended above all else. But not many people want to rid their assets to pay off revolving debts. Therefore, if this is something a consumer would not want to do or cannot do then do consider one of the above plans. Remember, never ever borrow money from a 401k. A 401k is your lifeline and not only would you deplete from that, but remember consequences do exist for early withdrawal. If you want an in depth comparison on debt consolidation vs debt settlement, contact American Debt Solutions today.

The pay forever program

That's right, we call this the Pay Forever Plan. Unfortunately, millions of Americans nation wide are struggling with their debts. Most consumers are paying just the minimum required payments and assume the balances will go down. Remember, the creditors are not your friends. The creditors structure their systems to hold on you down if you pay the minimum payments. Charges such as compounded daily interest rates, finance charges, not to mention late / limit / finance and annual fees enslave consumers to these corporations. If a consumer cannot double or triple minimum payments, theirs usually no hope. If a consumer is only meeting the minimum required payments, most of the payments are almost entirely interest charges only to have very similar balances next billing cycle.

In summary if a consumer owes $20,000 today, it would cost that consumer more than $40,000 over the next 20-30 years before they became debt free. They say it takes an estimated 2 years for every thousand dollars a consumer owes. If a consumer feels as if their getting no where, and wants a free quote on several debt relief options contact American Debt Solutions today.

Home equity / consolidation loans

A Debt Consolidation loan is one of the most common solutions that consumers seek. This is a mistake that will only destroy ones future hope at debt freedom. While many people work very hard to obtain homes and credibility, consumers typically obtain a home equity loan to consolidate their existing credit card debt. Before we move forward, here's two facts:

Secured Debt is a debt that is tied to physical property. Secured Debts are often homes and automobiles. For example; if a consumer doesn't pay the mortgage they will foreclose on the house. If a consumer doesn't pay the car payment, they take your car. This helps the lender provide a debt due to it being secured to physical property.

Unsecured Debt is a debt that is not tied to physical property. For example; most credit cards are unsecured debt. A Credit Card company cannot seize any of your personal assets whether it be a home, car or any other property. The credit card company would typically sell the unsecured debt to a collection agency hoping they could collect on you.

With that being said, do you know what we're getting at?
If a consumer gets a debt consolidation loan they've now turned the unsecured debt into a secured debt. So not only did that person just borrow money from one person to pay another (which will get you no where), but you made that unsecured debt a secured debt. Which means that if does not pay, they will come take your property. Why would a consumer put an asset they worked so hard for at risk? It makes absolutely no sense and should never be done.

Ignoring the situation

If a consumer ignores the situation, it may result in legal action. Creditors typically keep the accounts for 5 to 8 months after you've stopped paying. At this point they sell the debt to a collection agency or law firm which will attempt to collect on the debt. If you ignore the situation, it seems that legal action is inevitable. So paying back this debt is a must, but the question is how? If a consumer is delinquent, a debt settlement program may be best. Of all debt relief options, avoid bankruptcy at all costs. If you want to resolve the debt, try doing it through debt settlement.

Bankruptcy

The word bankruptcy would send chills down and lenders spine. If your credit score is not important to you, this would be labeled as your last resort. Let us not forget, since the new bankruptcy law that passed on October 17th 2005 it is more complex and much more expensive to file bankruptcy. They say bankruptcy stays on ones credit score for 7 to 10 years. However, most mortgage companies will now ask "have you ever filed bankruptcy"? Ever, being that key word.

The Financial Impact is severe, trying to obtain a mortgage, car, credit card, apartment lease, loans, a job or anything else that would require a credit check would make the approval rate extremely low. Bankruptcy shows that the consumer was irresponsible when having such debt. If a consumer is already delinquent and can't afford the debt management program, a debt settlement program should be sought. The worst thing a consumer can do, is file bankruptcy.

Finally, most people don't realize that bankruptcy can stay on their court records for over 20 years. Which means, filing bankruptcy may follow you for the rest of your life.

Consumers have a wide variety of debt relief options. American Debt Solutions can direct consumers to these debt relief options, and put them back on track to a debt free life.