Debt Management

Debt Negotiation Plans

This is the common scenario nowadays – many people feel worried, scared and sometimes helpless due to their unmanageable debt. According to recent statistics, there are at least 43 percent of all families in the US that spend more than they make each year. Using credit card to finance their luxuries such as flat panel TV has become part of their normal lifestyle. Good thing there is debt reduction plan to help them in getting out of debt.

Part of the plan to reduce your debt is to consider several debt negotiation services. It includes hardship plan, debt management plan, debt settlement and bankruptcy. Below are the explanations to help you decide what particular option will work best for you depending on your financial situation.

Hardship Plan – It is one of the debt negotiation services which are usually offered to people experiencing difficult times. Through hardship plan, you can negotiate with your creditors to lower the interest rate on your unsecured debt. You can also reduce your balance through eliminating some fees and finance charges.

Debt Management Plan – This plan is usually administered by a nonprofit credit counseling agency affiliated with Consumer Credit Counseling Service. Here, the credit counselor manages your account and places you in a strict budget based on your income and expenses. You will be required to make at least one month payment to the agency to cover all of your bills. Then, they will send out the individual checks and gives you confirmation.

Debt settlement – It is one of the debt negotiation services that allows you to pay off your debt by offering less than the amount you owe. Most of the time, credit card companies would rather settle with you than sell the account to a debt collector for a much lower cost. They can settle for as low as 20 percent of your balance.

Bankruptcy – A person can be eligible for discharge on his debt based on Bankruptcy Code. Chapter 7 provides full discharge of your debt if you do not have a real state or if you have a modest income. Chapter 13 provides you with a payment plan to repay some of your debt, with the remainder of debt being discharged. However, this will reflect on your financial report.

It is really difficult having the burden of debt weighing on your shoulder. It is like a huge monster that chases you everywhere to devour your whole family. But through debt reduction plan, getting out of debt can be handled in a much easier way.