Bankruptcy vs debt consolidation, which one is right for your current debt problems?

For many average Americans, especially in the current economic climate, paying the bills has become increasingly difficult. Unforeseen events like layoffs, cutbacks, and job losses can create stress and worry, especially to those on a tight budget. Many people have had to make serious spending cuts in order to make ends meet at the end of the month.

However, despite everything you can do, sometimes there just isn’t enough money when the paycheck comes in. Sometimes this can lead to a late credit card or bill payment. When that happens, it is easier for things to spiral out of control. As interest piles up, debt becomes greater and greater. Soon it may become almost impossible to pay off the accumulating debt.

However, people with excessive debt need not despair. For people in these types of situations, there are options and solutions for becoming debt free. One of these is debt counseling. Many companies offer the services of experienced financial specialists who can help people with excessive debt get their lives back into control. This may include a debt management plan or debt consolidation.

A debt management plan or DMP is involves the debt counseling and management company working with your creditors. By negotiating with your creditors, a debt counselor may be able to work out a repayment plan that is more realistic. This may include reduced payments and interest rates for you, the client. Usually the creditor will close the customer’s accounts and restrict the account from future access. One benefit of a debt management plan is that your debt counselor might be able to negotiate with your creditor for reduced interest rates, as mentioned before. This can save you several years of payments. Someone with a defaulted credit card account may be paying interest rates as high as 30%. At that rate, it could take as many as twenty years to pay off a large amount of debt.

Another benefit of debt counseling is debt consolidation. Very often a person with excessive debt has multiple sources of debt, such as multiple credit cards and loans. Often the combined monthly total of this debt is more than the monthly income of the debtor. This is one of the most crippling aspects of excessive debts. One of the benefits of a debt counselor is that they may be able, through negotiations with various creditors, to consolidate all of your monthly payments into one payment. Often, this payment is lower than the combined sum of the former payments.

By using these tools, a debt counselor can help a person with excessive debt get out of debt in a much shorter period of time. Finding a trustworthy debt counseling company can help bring your life back into financial order and freedom.

About the Author:

DebtGuru (http://www.debtguru.com/) is the Internet domain for American Credit Foundation, an IRS 501 non-profit consumer credit counseling organization and offers debt consolidation help. Art Gib is a freelance writer.

Art Gib | Debt Consolidation |

Tags: consolidation help, Debt Consolidation, Debt Counseling, Debt Management

A Free Gift For You!

As a way of saying "Thank You" for visiting this site here's a free gift for you. This money saving eBook is worth $17.

About this eBook: Are you wasting money? Chances are there are ways that you can easily cut back on your unnecessary spending and you won't even notice a difference. Simply learning about these techniques is the first step to making changes to your finances. We asked money experts what their best tips are for trimming the fat from the average person's budget and here are their suggestions. Click here to download this free eBook. This is a time limited offer and the download link can be taken away without notice. No sign-up form to fill-up, no email address to give, just plain free download!

You might also like to read these recommended articles

• The Pros And Cons Of Debt Consolidation
  Debt consolidation, although an issue of contention within financial planners circles, can be a life saving mechanism in terms of your overall debt management and debt situation, depending of course how deep in debt you actually are. This process offers one the option of securing all debts into a single facility that can be more easily managed than a whole range of accounts.
  
  
• How to Apply For a Debt Consolidation Credit Card
  Have you dazzled by the offers for the credit cards, which you get in your mail and applied to? Looking back, you locate yourself overhead while it comes to the debt and find you have a bad credit? So are you turned down by the traditional loan sites while applying for loan? Do not get alarmed & think you can never get loan as long as you are having bad credit. In actual fact, opposite is factual; you need to shop over for best deals while it comes to getting bad credit card loans.
  
  
• Debt Consolidation Can Be Efficiently Planned
  One thing that nearly everyone seems to have an opinion on, is whether or not debt consolidation is a wise or unwise move. At the end of the day, however, the only opinion that matters is the one coming from the person who is considering the consolidation strategy. Sometimes, the hardest thing to do [...]
  
  
• Relieve Your Debt
  As the amount of money you owe increases it is hard to imagine what it must be like being debt free; clearing debts takes time and you will have to start somewhere. Debt relief is not something you can delay as your debts will always increase when nothing is done to eliminate them. To avoid the situation worsening it is important to manage your money carefully and eliminate debt as early as you can.
  
  
• The Real Truth Behind Credit Card Debt Consolidation
  Credit Card Debt Consolidation  There are numerous websites that offer advice on how to consolidate your credit card debt. "credit card debt consolidation" is a standard phrase that you've probably heard a million times. Every now and then your popular newspaper will also contain an article or advise on credit card debt consolidation. TV channels [...]