Debt Consolidation: The process of consolidation must be selected when a person is facing the problems of paying back the money to many different lenders or companies. In this method, the fiscal lenders issue one single collateralized loan to a person. This loan is mainly issued for a short period of time. The good thing about this process is that the particular loan is granted at a low-interest rate.
Debt Settlement: If the gathered amount of debts is equal to ten thousand dollars, then debt settlement is the best way to get rid of this amount. The process is managed by the settlement companies. The financial experts of these companies negotiate with the lenders on the borrower’s behalf and due to their efforts; a person is able to get a 50% reduction in the principal amount.
Bankruptcy: The process of bankruptcy is the oldest way for the elimination of obligations. If the problem of liabilities is not solved with the settlement and consolidation deal, then bankruptcy is the only option to go for.
Credit Counseling: Credit Counseling, also commonly referred to as signing up for a debt relief plan, is another most common form of debt relief service. In this plan, you are required to make a one-time payment to a credit counseling agency directly, which in turn distributes your payment in the most effective way to your creditors.
In most cases, these agencies will also assist you in reducing your monthly payments by getting the necessary concessions in the interest rate from your creditors. This plan generally continues for a period of five years or so and does not affect your credit ratings.