Look at All Sides of Debt Relief Before Making a Decision

Millions of Americans are in over their heads with credit card debt and secured loans. Plastic has become an essential in a lot of households and accordingly minimum-only payments have risen to the point that consumers may find themselves looking longingly at debt relief. Television ads extol the ease of reducing payments, negotiating lower rates, settling debts, and consolidating debt. A decade ago there were around 70 companies who worked with debt relief, presently there are over 2,000. Some of these groups are scammers.

Hidden and high fees, unpaid payments, and non-negotiated lowering of principle are hallmarks of these unscrupulous charlatans. People needing help can find themselves worse off by working with them than before. Getting everything in writing is the only way to deal with debt consolidators. If it is verbal, it can be recanted and those promises to lower fees outrageously or to lower their own high rates or fees are unlikely to happen. The adage, if it sounds too good to be true, it usually is applies. It fits in one especially poignant urban financial myth: there is no Obama Debt Relief Program. Companies claiming to work with that program are lying! It is also important that you understand that if you work with a debt management group that your credit history will have notations on it for seven years that are coded DMP for debt management program. This is seen by creditors who pull a complete credit history as the equivalent of bankruptcy.

Given serious debt concerns many people do seek to consolidate their debt anyway, or opt for bankruptcy outright.

Repercussions exist and there are factors you may need to weigh if you are thinking about filing for Chapter 7 or Chapter 13. You may not file within an eight-year period of previously going this route. You will incur fees to file and it may take months which does not halt the debt collectors, the payments, or the stress associated with the ordeal of not having enough money to pay the bills. You should hire a lawyer if you are filing for bankruptcy, although that too is usually not pro bono, as laws and requirements are complex and if you miss any detail, the request may be denied.

On your credit history this status will exist for up to ten years and creditors pulling a full report will see the bankruptcy forever. Since court records are public domain, anyone doing an internet search for you is likely to see the online record of your bankruptcy proceedings as well. Kiss your car or home loans or possible mortgage goodbye. You may have trouble getting a good job or a nice place to live too. Bankruptcy says that you made a decision to stop paying your bills; you are now officially a bad risk.