Debt Relief Options

How to Choose the Best Debt Relief Options

When it comes to getting out of debt, make more money and spend less is always the common advice you will receive. When you’re past that point, you may have to consider debt intervention. There are a few legitimate options to intervene on a heavy debt load. These are credit counseling where your payments are reduced on a monthly basis over a four and five year period.

Another option is avoiding bankruptcy through negotiating your balance down. Typically it would be best if you came up with about half of what you owe over a prescribed period of time, which is usually going to be more condensed than a debt management plan.

A third option, of course, is bankruptcy. There are two chapters, chapter 7 and chapter 13. Each of these has different attributes and how long they’ll take. When you’re looking at your situation to determine which path is right for you, you need to consider your monthly income and expenses. You will then decide whether you can afford to pay 2% of your overall unsecured bills such as credit cards, store cards, gas cards, and medical bills.

Simply calculate the total amount of unsecured bills, and 2% of that would be your monthly payment in a debt management plan. Find out if you can afford that amount and commit to over a four and five year period.

Alternatively, you need to find out how long it would take you to accumulate about 50% of those balances (unsecured bills) and settle those accounts. If you cannot settle these debts in a couple of years, you should consider filing for bankruptcy.

Bankruptcy is often the last resort when dealing with debt. However, there are many factors that may influence your decision. Some of these include:

  1. What’s going to happen to your credit?
  2. How soon you may need credit?
  3. Do you need to refinance a mortgage?
  4. Are you trying to get a home or get student loans?
  5. Do you need dependable transportation?

Although the answers to these questions can actually affect the decision-making process, they are actually secondary factors.

Anyone who wants to find which path to take is advised to reach out to professionals at Pacific Attorney Group and do free consultations. Mr. Payam Shayani is an experienced bankruptcy attorney who will help you determine how a debt management plan might suit your specific needs. He will also advise you on how to find reputable professionals that offer debt settlement services.