Credit Debt Relief Help Programs - 3 Debt Relief Tactics To Avoid A Bankruptcy Filing

Feb. 10, 2011 - PRLog -- Credit debt relief help programs are very popular because of the fact that they do not have the negative financial effects which are present in the method of bankruptcy. These methods as opposed to the method of bankruptcy ensure that the credit score of the consumers remain intact. The 3 debt relief tactics to avoid bankruptcy filing are mentioned below:

Tactic One: Eliminate at least 50% of the dues

This method is the method of settlement. Here the consumer needs to hire a professional settlement firm which will negotiate with the creditor on behalf of the consumer to eliminate at least 50% of the dues. Depending upon the skill and negotiation power of the negotiator or the settlement attorney (depending upon the jurisdiction), the amount of elimination that the consumer can earn can at times be more than fifty percent and can even reach as high as seventy percent of the total outstanding. Here the negotiator or the settlement attorney makes use of the bankruptcy threat to force the creditor to accept the deal offered by the consumer. The thought of bankruptcy filing is quite intimidating for the creditors because in case the consumer actually files for bankruptcy, the creditor will lose all the money. It is better to eliminate at least 50% and get back the remaining 50 and that too in bulk. The credit score of the consumer remains intact in this method.

Tactic Two: Reduce the monthly installment burden

Here the consumer hires a consolidation firm because the method is know as the method of debt consolidation. The consolidator forces the creditors to reduce the interest rates on the loans and also to eliminate some of the costs which remain associated with the loans. These costs are none other than late fee, insurance charges, over limit fee, service tax and others of similar nature. The creditors are forced to eliminate the costs and to reduce the interest rates by the threat of bankruptcy. The creditors then reschedule the loans as per the new interest rates and the consumer is then required to pay the bulk money to the consolidator every month who then distributes the money among the creditors. This reduces the monthly installment burden for the consumers and getting out of debt becomes easy without affecting the credit score.

Tactic Three: Managing the debts and paying the high interest ones first

This method is called debt management and there is no professional help involved here. The consumer needs to make a new budget and take out the unnecessary expenses. This saves a lot of money. The consumer then needs to add this saved money along with the money kept aside every month for debt repayment and then start paying with the debt which has the highest rate of interest. Then comes the next with the one having a lower interest and then other with even lower interest. This helps in containing the rapid growth of the debts due to fast accruing interest rates. This way the consumer can get rid of the dues in a period of 5-7 years and become debt free without affecting the credit score. This method is however, the least used method.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate debt help in your state.
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