Consider Debt Relief Solutions Wisely

An unprecedented number of consumers have made a high priority of taking action about their unsecured debt problems during the period of the past several years. There are many reasons for this phenomenon, however the two that must surely be most prominent among them are the many financial hardships caused by the recession and the large number of consumers with high interest credit card debt. These two reasons in tandem created an even more difficult problem that continues to threaten the financial well-being of millions even today, and perhaps is even more ominous for consumers for this reason. Being able to make only the minimum monthly payments on these credit card accounts is the problem, and it is because the recession has already placed so many financial pressures on them to begin with. When just the minimum payments are paired with high interest accounts, repaying the debt can easily take 20 years or even longer. As appalling as this situation is for consumers who are in this horrible mess, they should not be too quick in deciding on a remedy for their particular situation. The reason for this caution is that some of the credit solutions available can have some very regrettable consequences for the consumer when the related process does not run as smoothly as anticipated or hoped for.

To try budgeting your way out of the problem is always the first choice for unsecured debt relief. With a minimum of negative consequences and at a minimal cost, some situations can be resolved for the consumer completely by using this method. If this proves unsuccessful then the choice needs to be made very carefully from among three options offered by debt relief companies. Each of these options (bankruptcy, debt settlement and credit counseling) has a set of characteristics that will suit some debt situations better than the others. It is very important to match the solution to the problem at hand appropriately, otherwise needless risks may ensue that can create a larger problem than the one that existed when relief was first sought. The first option to try on for size is usually credit counseling, as it is the only one of the three that will cause no credit score damage. If it is determined that the consumer can afford the payment required for the debt management plan (DMP) available in credit counseling, then this is likely the wisest choice to make. While the debt relief benefits of bankruptcy and debt settlement can exceed those of credit counseling, these two options will cause some serious damage to the consumer's credit.