Debt Repayment Options

There are numerous debt repayment options, each with their own sets of pros and cons.  You can choose one of these after factoring in your debt amount, income, monthly expenses, credit rating and the amount of debt that you actually want to pay off. Here are some debt repayment options which you can consider.

Debt Repayment Options

Paying yourself

This option means that you repay the debt all by yourself without any external help.  You put together a repayment plan and then stick to it. In the process, you can try talking to your creditors in an attempt to get a lower interest or some other flexibility.

Generally, the payment plan considers both secured and unsecured debt.

Consumer Credit Counseling

A counseling agency works with you and develops a payment plan for unsecured debt after considering your budget. Formally, you are said to be on the debt management plan or the DMP, and this shows up on your credit report. However, your score isn’t affected.

Generally, DMP is based on lower interest rates and smaller payments. Credit counseling lasts for 3 to 5 years during which you cannot use credit cards.

Debt Consolidation

Debt consolidation is the process of combining all your debts after which you only make a single monthly payment. Some programs may also pay off unsecured debt, but your credit score should be good to avail this. Other programs are similar to credit counseling, combining your monthly payments.

Debt Settlement

Debt settlement can reduce your debt by around 40% to 60% if successful. You pay monthly charges to a settlement firm which negotiates a lump sum payment lower than the owed amount. If agreed upon, the debt firm repays the debt through the fees which you pay them. However, there isn’t any guarantee that your creditors may accept the offer. If they decline, you may or may not get a refund.

Always consult a Sacramento bankruptcy lawyer for help when reviewing your debt repayment options. Be sure you know all you need to know to make an educated decision.

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