Your Best Debt Elimination Options
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In some cases these debt elimination options can completely eliminate the interest portion of your debts. This allows you to apply every dollar of every debt payment towards the principal amount of the loan. Can you imagine how quickly you could pay down your debts if you weren't paying interest and late fees?
Let's take a look at some of these debt elimination options:
Option #1: Using A Non-Profit Debt Consolidation Company
This is one of the few debt consolidation options that is available to all consumers whether they own their own home or not. It is not a loan. When you choose to work with a non-profit debt consolidation company all of your debt payments are consolidated and you make a single payment each month to the debt consolidation company, who then pays your creditors from these funds.
Make sure that you understand that it is not your actual debts that are consolidated, but rather your debt payments.
So what's the benefit?
There are several.
The first thing a good debt counselor (who will work for a debt consolidation company) will be to negotiate with your creditors to reduce the interest rates on your debts. Most times a good non-profit debt counselor can get your interest rates reduced by as much as 100%. This would leave only the principal portion of the debt to pay making this one of the most popular debt elimination options.
The next thing they will do is work with you and your creditors to arrive at a monthly payment that you can handle and the creditors will accept. This will help you start meeting your monthly obligations and building your credit back up.
How is this all possible you ask? Well, keep this in mind. Your creditors are not doing this out of the goodness of their hearts. You see, many debt consolidation companies are structured as "non-profit" organizations, allowing creditors who sponsor them to recoup most if the lost interest charges by way of a tax write off. In addition, by working with you and your debt counselor in reviewing your debt elimination options, they are trying to insure that they at least get their original investment paid back.
This truly is a win-win situation and one of the few areas where you, the average consumer actually benefits from large corporate tax laws. Debt counseling is relatively new and is fast becoming one of the most recommended debt elimination options in America.
If you are interested in learning more about debt consolidation and would like a free debt analysis done for you, here is a link to the company that we typically recommend to our visitors.
Another option available to you is what is called debt negotiation, and is explained below.
Option#2: Debt Negotiation
Debt negotiation is different from debt consolidation in that you, or a company that specializes in debt negotiation, will negotiate a one time lump sum
with this option you actually reduce the total amount of debt by 50% or more.
In fact, it is not uncommon for a good debt relief company to get reductions for their clients of 70%-89%. Click here to view a few real life debt elimination letters received by people just like you through debt reduction services.
A warning though. When it comes to your debt elimination options this type of action is a much more aggressive approach and may not be suited for your situation. We highly recommend that you consult with or retain a professional in this field before you consider this option.
In other words, debt consolidation and debt negotiation are two different approaches to solving your debt problems. Most debt relief companies will offer one or the other option, but rarely will one company offer both options. This may lead to you being "talked into" a plan that suits the debt relief company but not you. A bad situation!
To avoid this I recommend talking to a highly respected and regarded company that offers both debt consolidation and negotiation options. Their highly trained staff will assess your situation and discuss the option that suits you best, not them. You can visit them here and receive a free, no-obligation personally customized debt reduction plan suited just to you.
Basically what happens in a consumer debt negotiation settlement is that you stop paying your creditors altogether, during which time you make deposits into a bank account that you control, building up money so that once a debt negotiation settlement is reached, you will have the funds to pay off the reduced debts in full. You may also consider taking out a home equity loan (if you own your own home) to pay out the debt settlement.
Again, when it comes to considering your debt elimination options keep in mind that this is a very aggressive option and can seriously damage your credit rating when you stop making payments. However, if your credit is in serious disrepair already and you are considering bankruptcy this option could be for you.
Option #3: Take Out A Home Equity Loan Or HELOC
Our final suggestion when it comes to your debt elimination options is reserved for home owners.
If you own your own home you could consider taking out a home equity loan or HELOC (home equity line of credit) to pay off your consumer debts. By doing this you could pay off your debts completely and although you will now have a new loan, it is likely that the interest rate will be much much lower than what you were paying on your other debts.
Most credit card debt carries interest rates of 18% or higher while the rate on a new home equity loan will be considerable less.
And.
The interest you pay on a home equity loan or HELOC is tax deductible on top of that. A double bonus.
**Tip: The best way to make sure that you get the best loan rate is to use a mortgage broker. Brokers will get several loan companies to compete for your business at the same time, guaranteeing that you get the best rate and the right loan company that fits your needs.
When it comes to your debt elimination options we think the three that we have outlined are the best. There are other debt elimination options available but again, these three options are what you should consider first and foremost.