By: Michael Millington

Having the proper debt assistance can help to relieve any debt situation you might have. Unsecured debt can quickly become an issue for those not ready to handle it. Credit cards, personal loans, medical bills and more, can grow to overwhelm anyone. Knowing who to turn to can provide an invaluable resource, potentially resulting in money being saved and the avoidance negative financial actions being taken.

 

Types of Debt Assistance

 

Debt Consolidation

Debt consolidation has the distinct ability to combine multiple debts under one financial obligation. With one large loan, an individual could pay off all (or most) of their smaller debts. This would effectively eliminate the need to make multiple payments to multiple credit providers. This can help to eliminate the issue of having multiple interest rates, late fees and various credit providers to deal with. Many times, the debt consolidation loan has a lower interest rate than any of the debts it handles.

Debt consolidation can be a particularly helpful form of debt assistance if you have the ability to pay off your debts, but you have too many of them to keep track of. Debt consolidation loans can also be difficult to procure if your credit score has suffered. Having a hard inquiry added to your credit record by trying to acquire a consolidation loan can also knock your score down a bit.

 

Credit Counseling

The point of credit counseling is to enhance your knowledge of your own debt and financial ability. A credit counselor is tasked with teaching you how to alleviate debt based on what your income and debt amounts are. There are instances when simple counseling does not suffice. In these instances a debt management plan may be suggested to handle a particularly difficult amount of debt. This can allow you to pay off the debt without having to worry about interest rates or other fees.

Even though credit counseling does not have to have any direct involvement with your debt, it can provide you with welcome information about your financial situation. This requires you to have an immense amount of discipline to change your financial habits without the help of a debt relief professional. This type of debt assistance works best for those who have a better knowledge of their financial ability.

 

Debt Settlement

Settling a debt can be of immense help to those dealing with cripple financial issues. Debt settlement can help to lessen the amount of debt you have and bring it to a manageable state. Unlike other forms of debt assistance, debt settlement actually reduces the principle amount of debt you own. This can help save you a substantial amount of money while moving you closer to debt elimination. While a settlement is not always accepted by a creditor, it can be extremely helpful when it is.

Debt settlement can be a very helpful source of relief for those dealing with unsecured debt, but it also requires you to have faith in your debt settlement providers. Instead of paying your creditors directly, you’d be depositing money into an account to accumulate for a settlement payment. This requires dedication on the part of the debtor as missed deposits may lead to the end of the program.

 

Bankruptcy

Widely known as a last financial resort for most, bankruptcy has the greatest benefits that come at the worst cost. Filing for a Chapter 7 bankruptcy can wipe out most unsecured debts, discharging them completely and absolving you of any monetary obligation. However, this also results in a serious blow to your credit score for at most 10 years. During this time it will be difficult to be viewed as credit worthy by lenders. It’s a very risky method of debt assistance to seek out, but if you’ve run out of options bankruptcy can help get you out of debt.