Should I Pursue A Debt Settlement Program? Do I Risk Bankruptcy?

There are several options you can choose from in handling the situation. Filing bankruptcy is one solution and you may want to seek advice from an attorney who specializes in that field.  The attorney will advise you as to whether you should file for bankruptcy and which type you may be eligible for.  There are advantages and disadvantages to filing bankruptcy and a qualified lawyer will be able to go over these with you.

Debt Settlement is another option.  The debt settlement will negotiate agreements with your creditors.  These are generally for amounts less than you owe.  You must make payments into an account.  When there is enough money in the account, the settlement company will pay off the negotiated amount with a creditor.  The settlement company can get creditors to agree to make a credit entry on your credit that the account was paid according to terms.  These are things you should explore when selecting a settlement company. These companies will charge a fee, but your overall repayment plan will be less than what you are currently paying.

Credit counseling is slightly different from settlement.  The credit counseling company will work with the creditors and arrange for you to pay a little on each account every month.  These payments are at a lower interest.  Therefore, the monthly payment is less than you would normally pay.  The money is sent to the counseling agency each month and they disburse the money to your creditors.  Your credit will remain good if you successfully complete the program. The credit counselor will charge you a fee for their services, which is a percentage of your monthly payment.

Lastly, you might be able to negotiate directly with your creditors for lower payments.  When hiring any service, it’s a good idea to make sure the Better Business Bureau endorses them.