Credit Counseling Solutions - The Pros and Cons
Most decisions in life present us with two sides, multiple ways of looking at ideas, concepts or plans of action, the so-called pro and con analysis. A decision to choose which direction to go with your debt reduction is no different. While we'd be hard-pressed to find anything inherently "bad" about eliminating long-overdue debt or credit card bills that can't be paid, or burdensome bills that continue to mount; we do know there are both effective and in-effective ways to proceed. Depending on a debtor's unique set of circumstances one method will beat out the other most often.
Creating a short list of the best debt-reduction pros and cons is not the intellectual equivalent of pulling teeth. The quest for debt consolidation, debt management and debt survival is eminently do-able. Regardless of what you may or may not have heard, we're going to remove the hassle of discovering your debt relief pros and cons. So let's get started.
Ask yourself this question: "What's the best way for me to end my debt problems?" If you're not "hearing" that little angel whispering in your ear or if that light-bulb of certainty has gone dark, don't despair. You're not alone. Hundreds of thousands of debt-ridden Americans have hit that brick-wall of indecision. Troubled debtors who can't pay their bills or find a solution. They're stumped and often frustrated.
There is indeed a short list of pros and cons and while each person's set of circumstances will vary, there are general principles that apply to all. Let's assume you've got thousands of dollars in unpaid debts - mainly unsecured debt like credit cards. The monthly minimums have become impossible to pay-down and the interest is killing your life-style. You've thought about bankruptcy and yes, there's pros and cons there too, but let's examine debt consolidation pros and cons first. When you consolidate debt, you're usually taking out a loan - called a debt consolidation loan. Typically, such a loan is secured by an asset, like a home, with the objective to borrow enough (from a bank, credit union or private money sources) against the home to pay-off debt and do so while enjoying a lower interest rate. This reduces the monthly payment and can also shorten the amount of time it takes to pay off the debts. That's a great, positive thing. Lower interest rate, shorter payback time, one convenient, more affordable payment. These are the pros.
The cons - potential downside - to a debt consolidation loan is not always so apparent. Fail to pay your loan, let it get too far behind and you've put the house in potential jeopardy. Paying off un-secured debt with a secured debt may not be the best option for people who easily fall behind. For such people - those lacking necessary financial discipline - an overdue consolidation loan only compounds the pain of unpaid credit card bills - a real debtor-double-whammy. For those with the discipline and perseverance required, however, debt consolidation loans can be a life-line in stormy financial waters.
Credit Counseling Agencies
If you're a debtor residing in Florida and looking to pay your debts in full, the Consumer Credit agency route, also known as CCCS, provides a debt-payoff strategy that, for lots of folks, works. Let's examine the pros which are numerous. Elect to have a customized Debt Management Plan (DMP) and you'll be able to start reducing all unsecured debt, including credit cards, doctor offices, hospitals, clinics, club memberships, cell phone bills, and utilities --hopefully at a lower interest rate and with one affordable lower monthly payment.
Lobbying to secure credit card company approval for your DMP, a reliable and disciplined agency should be able to design a program for you that, if followed faithfully, can help you become debt-free in three to five years. "Cha-ching" in your favor, another one for the-pro-side of the debt-relief equation. Add to that, agency-driven automatic distribution of your on-time monthly payments and the benefits keep on coming. A good, dependable credit counseling agency employing straight-forward CCCS techniques will lobby the credit card companies to lower your interest rates, get fees waived or forgiven, secure lower, more affordable payments, consolidate all unsecured debt, and most importantly, create one manageable payment.
Taking the credit counseling agency path can be a win-win for all: the consumer, credit card companies and all unsecured debt holders. Are there cons? A down-side? The short answer: You should be fine if you get on a plan that puts you on a predictable path to a debt-free date. As long as one finds and works with a reliable, trusted and proven credit counseling agency, things should go as planned. Beware of the unscrupulous, however, as there are a handful of less-than-reputable companies doing business in Florida and around the nation so check with several companies before you make your final decision. Getting off the debt treadmill takes perseverance and determination and a debt relief company that can hold your hand while you take the steps necessary to become debt free.
Debt Settlement Companies
For many, going the "debt settlement" route can provide a welcome alternative to personal bankruptcy. Here are the pros and cons in brief:
- Can help consumer settle for much less
- Provides a viable option to bankruptcy
- No upfront fees in "performance-based" debt relief model
- If settlements are not reached, there are no settlement "fees" unless you are getting relief via attorneys who you have met with in person as part of the "attorney-based" debt relief exclusion.
- As you fall behind, negative reporting could continue to damage credit score
- If you default on payments, you could potentially be sued for being in default
- People already in debt are often very likely to have trouble "setting aside" a fund from which to make lump sum offers to the credit card companies.
If you decide to go the debt settlement route, similar to the credit counseling agency discussion above, choose wisely. For additional insight, and for residents of Florida in need of debt relief, you may request a free debt relief analysis and savings estimate at no obligation.
Bankruptcy Pros and Cons
The most drastic debt relief option, one with dramatic results and dramatic pros and cons. Bankruptcy laws vary from state to state and Florida is no exception.
- Stops ALL Collection Actions
- Begins Clean Financial Slate
- Keep home, car and some essential possessions
- Start rebuilding credit faster
- Credit Card loss and inability to have new cards soon
- Inability to secure a home mortgage
- Remains on credit report up to 10-years
- Student Loans and back-taxes do not qualify
- Provides new lease on life, but not without some long term financial implications
Bankruptcy is indeed a viable and important debt relief option, but should be carefully considered before proceeding.
Credit Counseling Agency, Debt Consolidation Loan, Debt Settlement, Bankruptcy. All viable choices, each with its own set of pros and cons. The bottom line for anyone seeking satisfactory debt-relief is choosing the method best suited to you, your situation and your comfort level. To find out more about debt relief options, you can get a free debt relief analysis and savings estimate at no obligation.