Debt Solutions – which are best for getting out of debt while maintaining your credit?

 

Some debt solutions are better than others and some affect your credit more than others. So which is best?  Use the following to help you decide. 

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DIY

 You will not necessarily get lower interest rates on existing balances unless you do the negotiations yourself.  You can save money by paying more than the minimum monthly payment and lower interest rates if you are successful in your negotiations. 

On time payments will help your credit score and will make getting new credit and/or lower rates on loans easier. Very positive. 

No additional fees have to be paid to outside parties. 

Debt Management / Credit Counseling  

The company will negotiate lower rates on existing balances. You will save money on lower interest rates. 

 It could take a little longer to get better credit but overall – no negative impact on your credit. 

You will pay fees for the service. Compare what you will save vs what you will pay in fees. 

Debt Consolidation

The company will negotiate lower rates on existing balances. You will save money on lower interest rates. 

It could take a little longer to get better credit but overall – no negative impact on your credit. 

You will pay fees for the service. Compare what you will save vs what you will pay in fees. 

Debt Settlement 

You can get debt reduced by 40% – 60%. 

Has a negative impact on your credit and will lower you score. 

You will pay additional fees for the service

 

Bankruptcy (The worst option) 

Not all debts can be included. But interest will be eliminated and debts will be discharged for those that are included (you are o longer liable for those debts – however creditors could decide to sue you to collect) 

Very negative. Can stay on your credit report up to 10 years. Lowers your score by up to 200 points.  It can take up to 4 years to get good/new credit. 

Filing and attorney fees have to be paid. 

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