The difficult economic condition has adversely affected many of us out there, as many now struggle with mounting debt troubles that cripple them financially. If not addressed quickly and effectively, these problems could turn into more serious complications, for instance bankruptcy. Those caught in debt problems such as accumulated credit card debts should seek debt relief solutions that would assist in eliminating all your debt effectively in a time-effective manner. Debt relief comes in many forms; the most popular form of which is debt consolidation.

It is best that you explore all other options out there in terms of debt relief before you decide on the solution that works best for you. For instance, if you have mortgage-related debt issues, you could probably opt for refinancing to help you clear your debt in a more cost-effective way. But if you have multiple credit accounts that have balances on them that need to be cleared, the debt consolidation option would probably be the best option for you.

Before you agree any debt relief or consolidation deal with a company that is able to help you clear your debt, ensure that you compare a few quotes from different debt relief companies and select the package that is the most attractive. You should take into account factors such as the monthly commitment amount, how badly would your credit be impacted, how much it would cost you, and how long the duration would be to ultimately clear your debt.

Before you opt for any debt relief solution, you should first consider credit counseling to allow you to fully understand your current credit situation. Attending credit counseling would also assist you to understand what has gone wrong in the past to leave you in this difficult financial situation. Today, credit counseling firms also offer debt management plans that could help you effectively clear your debt.

When you sign up for a debt management plan with a credit counseling firm, you should be able to clear your existing debt, albeit with lower monthly payments. This is due to the fact that your credit counseling firm would negotiate with your lenders to obtain a lower interest rate for your current loan. You would then pay your credit counseling firm that would proceed to make the agreed monthly payments to your lenders as per normal. The benefit that you would generally reap is a lower monthly payment (due to a lowered interest rate). This option would typically take you three to five years to completely clear your debt, and generally does not impact your credit score.

There are two more effective debt relief options available out there today, namely debt negotiation and debt consolidation. Debt negotiation, also known as debt settlement, is a method where you sign an agreement with a debt relief company that would then manage your credit accounts for you. Keep in mind however that you would not be directly paying your lenders, thus your credit score would impact your credit score negatively. On the other hand, you could end up paying up to 50% less in terms of monthly payment, thus you would effectively be able to clear your debt in approximately two or three years. And this is usually the fastest way to achieve a debt-free life that we so often look forward to.

The other solution that you should consider, especially if you have multiple credit accounts, is the debt consolidation loan. In reality, you are opting for a loan that would merge all your credit accounts into a single account. Not only should you be able to obtain a lower interest rate for this consolidated loan, you should also be able to manage all your debt more conveniently. Another form of debt consolidation is by applying for a home equity loan against the equity within your home. This loan is tax-deductible, and carries a lower interest rate compared to credit card interest rates. Thus if you have mounting credit card debt issues, why not consider a home equity loan to clear your credit card balances? Nevertheless you need to be aware that you are opting for secured debt with your home as collateral. Thus take heed not to miss payments with this home equity loan, or you could risk losing your home to your lender!

Whether it is credit counseling, debt negotiation or debt consolidation, choose the option that suits your requirements best, and proceed to efficiently clear your debt with the chosen solution. All the best!

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Category: Finances
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