In some cases these debt elimination options can completely eliminate the interest portion of your debts. This allows you to apply every dollar of every debt payment towards the principal amount of the loan. Can you imagine how quickly you could pay down your debts if you weren't paying interest and late fees?
Let's take a look at some of these debt elimination options:
Option #1: Using A Non-Profit Debt Consolidation Company
This is one of the few debt consolidation options that is available to all consumers whether they own their own home or not. It is not a loan. When you choose to work with a non-profit debt consolidation company all of your debt payments are consolidated and you make a single payment each month to the debt consolidation company, who then pays your creditors from these funds.
Make sure that you understand that it is not your actual debts that are consolidated, but rather your debt payments.
So what's the benefit?
There are several.
The first thing a good debt counselor (who will work for a debt consolidation company) will be to negotiate with your creditors to reduce the interest rates on your debts. Most times a good non-profit debt counselor can get your interest rates reduced by as much as 100%. This would leave only the principal portion of the debt to pay making this one of the most popular debt elimination options.
The next thing they will do is work with you and your creditors to arrive at a monthly payment that you can handle and the creditors will accept. This will help you start meeting your monthly obligations and building your credit back up.
How is this all possible you ask? Well, keep this in mind. Your creditors are not doing this out of the goodness of their hearts. You see, many debt consolidation companies are structured as "non-profit" organizations, allowing creditors who sponsor them to recoup most if the lost interest charges by way of a tax write off. In addition, by working with you and your debt counselor in reviewing your debt elimination options, they are trying to insure that they at least get their original investment paid back.
This truly is a win-win situation and one of the few areas where you, the average consumer actually benefits from large corporate tax laws. Debt counseling is relatively new and is fast becoming one of the most recommended debt elimination options in America.
If you are interested in learning more about debt consolidation and would like a free debt analysis done for you, here is a link to the company that we typically recommend to our visitors.
Another option available to you is what is called debt negotiation, and is explained below.
Option#2: Debt Negotiation
Debt negotiation is different from debt consolidation in that you, or a company that specializes in debt negotiation, will negotiate a one time lump sum