Debt Strategies
Everyone’s debt situation is different, so we encourage you to learn more about other options before you decide if our debt resolution program is right for you. As you compare, we feel the best solution will be clear.
THE STRATEGY
Credit Counseling
What is it?
A counselor reviews your financial situation, sets up lower interest rates with your creditors if possible, and creates a debt management plan for you to follow.
Pros
- One monthly payment
- Lower rates and fees
- No collection calls
Cons
- Lenders may view you as a credit risk, as this looks as bad as a Chapter 13 Bankruptcy
- Principle balance not reduced
- Credit card accounts closed
- Still paying full balances plus interest
THE STRATEGY
Debt Consolidation
What is it?
You take out one loan to pay off all your debt. This loan may carry a lower interest rate than your debts. You make fixed monthly payments on the loan until it is paid off.
Pros
- One predictable monthly payment
- Flexible terms
- No credit impact
Cons
- You need good credit
- No reduction of balances
- Still paying interest
- Results Vary
- Takes longer to pay off debt compared to other options
- Merely shifting the debt from your left to right hand
THE STRATEGY
CASH-OUT REFINANCE
What is it?
Requires you to work with a mortgage lender. You refinance your mortgage, taking out additional cash beyond the mortgage balance. You use that money to pay your debts.
Pros
- High interest debts paid off
- Reduced monthly payments
- Tax deductible interest payments
Cons
- Need to own a home
- increased foreclosure risk
- Adds to mortgage debt
- High closing costs and loan fees
THE STRATEGY
DEBT SETTLEMENT
What is it?
Working with a company, you make monthly deposits into an account. The company negotiates with your creditors to accept less than the debt owed. That amount is then paid to creditors, from the account you deposited into, until the debt is resolved.
Pros
- Savings over making minimum payments
- One monthly program payment
- Faster than making minimum payments
Cons
- Harassing Collection Calls
- Legal risk
- Negative impact on credit
- Your income & assets are not protected putting you at risk of garnishment or seizure
- Not a significant savings as you'll pay back about 75-85% of your balances after their fees
THE STRATEGY
BANKRUPTCY
What is it?
A legal process. All your assets are evaluated and used to pay off your debts. Chapter 7 and Chapter 13 are most common options used by individuals. Once bankruptcy is complete, you are relieved of the debt obligations you had before filing bankruptcy.
Pros
- Debt obligation could be cleared (Ch 7 only, not Ch 13)
- Creditors are barred from attempting to collect on debts
- Process takes 3-6 months
Cons
- Significant, long-term damage to credit (7-10 years)
- Loss of all credit cards
- Chapter 7 is difficult to qualify for
- Chapter 13 is simply a repayment plan dictated by the court
- Forces you to liquidate all assets in order to pay back debt
- Forces you to spend all your disposable income towards paying back debts
- Can prevent new employment
- Can increase your insurance premiums
- Posted publicly placing a negative stigma on your name
THE STRATEGY
DO IT YOURSELF
What is it?
Using various online and offline tools, you determine the exact payments required for each debt and track your progress as you go.
Pros
- Optimized payments
- No required costs
- No credit impact
Cons
- Requires strict budgeting
- Interest rates don't change
- No reduction of balances
- Takes longer compared to other options
THE STRATEGY
DEBT CANCELLATION
(what we do best)
What is it?
Instead of seeking a settlement with third party collection agencies, we challenge their right to collect from you in the first place. As they don’t have the original contract with you, this leads to the debt being legally cancelled to zero typically between 12-18 months.
Pros
- You only pay 20-30% of your balances
- No more interest
- No harassing phone calls
- Your income & assets are fully protected giving you peace of mind
- Get out of debt in only 12-18 months
- All communication with creditors and collection agencies are handled by us freeing up your time and energy
Cons
- Possible legal risk, the same as debt settlement or simply being behind on your payments. However, your creditors will never be able to collecton a judgement if they get one due to our Asset Guard program
- Must maintain program payments
Whichever strategy you choose, know that you are not alone. Millions of Americans are struggling with high interest rates, stagnant wages, and unstable employment, but not all of them are actively looking for a solution like you are right now. So keep going!
If you need help understanding the differences between these options, give us a call. One of our Certified Debt Consultants would be happy to answer any questions you have.