Mired in excessive debts with several credit accounts to your name that you are struggling to pay off? If yes is your answer, you should probably look for an effective debt settlement plan to help you overcome your debt issues! Unsure of how to go about with an effective debt settlement program to suit your current needs? Why not opt for a credit counseling session first? There are many options available out there if you are seeking credit counseling, for instance the Consumer Credit Counseling Service (CCCS). The CCCS has many debt and credit counseling companies under its organization, and you could seek advice from professional counselors that would be able to help overcome your current debt issues effectively. More often than ever the solution of debt consolidation is proposed for your benefit. Many have tried this option successfully in the past to help them overcome debt accumulation, and you could be one of them as well.

Debt consolidation could be accomplished with the utilization of a debt consolidation loan that is offered by many debt settlement companies out there. The type of debt consolidation loan that you require would fully depend on the type of credit accounts that you want to consolidate, the balances in question, as well as the creditors that you are dealing with. For instance, if you currently own a home, you may opt for a secured debt consolidation loan. Secured debt consolidation loans are usually backed and endorsed by the government, and is basically a home equity loan that is utilized to settle off all your other creditors. You could then be able to consolidate and merge all your credit accounts under a single payment that you make monthly, usually with a lower interest rate. Beware however that you are converting all your unsecured debt into secured debt that is dependent on your home. This means that if you face difficulties to pay the agreed monthly amount in the future, you could easily be facing the reality of bankruptcy!

On the other hand, there are plenty of debt settlement companies that would be able to offer you unsecured debt consolidation loans to help you merge and eliminate all your debts successfully and effectively within three to five years. This is probably the safer option if you are unsure of how stable your financial situation might be in the next five years, as it would not affect your secured debt. Before you sign any package from a debt consolidation firm, ensure that you are dealing with an established and legitimate company first. You could do this by checking the legitimacy of the company with the Better Business Bureau (BBB) before commencing with a debt settlement deal with the company.

There are a few things that you should be aware of if you are choosing to go with the debt consolidation option to help you settle your debts. For one, you should understand that there are numerous debt consolidation companies existent out there today, and you have plenty of choices to choose from. This proves true even if you have a bad credit score to begin with. The competition between these companies to find customers are high, thus you have the liberty to pick and choose to get yourself the most attractive debt settlement deal out there. You should thus obtain at least five separate quotes from different companies, and compare them meticulously to ensure that you select the best deal.

Secondly, you need to be aware of the fact that your credit score would most probably experience a drop of when you opt for debt consolidation. Part of the reason of why this decrease might occur is due to the fact that your debt consolidation company would help you close several credit accounts at one time. When this happens, your credit score would probably plummet almost instantly. Nevertheless you would do well to look at the long run benefits. Although you credit score drops now, you would be able to rebuild it within a few years, and emerge debt-free when the period comes to a close. That alone should be reason enough to convince you to opt for debt consolidation.

Having said that, if you are anticipating a situation where you are planning to seek a new loan for the purchase of a car or a home, it is advisable that you put off debt consolidation plans for a short duration. Decreasing your credit score significantly before you apply for a new loan is hardly ideal to help you get a good interest rate with the new loan deal. Thus timing is exceptionally important when you consider a debt consolidation solution. But if you are facing financial difficulties with your currently credit accounts, it would not be advisable for you to opt for another loan before you sort out your current credit accounts.

If you cannot afford to commit to a debt consolidation program, and all other options have been exhausted, bankruptcy could work as the last resort. If you are indeed considering this option, you would first need to hire a qualified and legitimate bankruptcy lawyer that would help you with your bankruptcy application. This attorney should also be able to pinpoint for your benefit the advantages and disadvantages of the bankruptcy option, and whether it is a viable option for you. Remember, always keep this option as the last possible one, and utilize it only after you have considered all other possible solutions to debt settlement.

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Category: Finances
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