The overwhelming task of eliminating your debts can often seem like an uphill battle. Without the knowledge and expertise of a professional on your side, unfortunately, the odds are not in your favor. In order to reduce your debt, you have several options; however, if you want to maintain a "good credit rating", you have to pay you bills on time; anything else will cause your credit score will suffer. With that being said please consider the following:

Option 1 - Consumer Credit Counseling

Consumer Credit Counseling companies were originally established to help credit card company's recover revenue from clients that were falling behind on their bills. Choosing to use a Consumer Credit Counseling service can have negative effects on your credit that last up to 10 years. These services are also considered Chapter 13 Bankruptcy by most lending institutions. The bottom line is that Consumer Credit Counseling companies work for the creditors and banks.

By using their services, you will end up paying back your full debt, plus interest. These companies do not always provide financial relief as consumers often find out.

Option 2 - Debt Consolidation Loan

Borrowing from Peter to pay Paul is no way to get out of debt. It is however, the premise behind debt consolidation programs. Debt consolidation programs require that financial institutions provide consumer loans based on items of equity. For example, a home equity loan is used to "combine" your debts into a single monthly payment, which can often take 10 to 20 years to repay depending your on financial situation. This may seem like a viable solution in the short term, but missing payments on a secured loan could cause you to lose your home or the collateral you pledged. Many people who decide to go the debt consolidation route find themselves worse off than they originally were. It is not a good idea to exchange your unsecured debts for secured debts.

Option 3 - File Bankruptcy

While bankruptcy may seem to be the most expedient method for removing your unsecured debt, it is not, by any means, the best answer. A bankruptcy will remain on your credit record for 7-10 years and seriously affect your ability to rebuild your credit. Even after a bankruptcy has been removed from your record, you are still required to disclose it on forms and applications; even applications for employment. If you fail to answer this question truthfully it can be considered a crime. Additionally, certain types of bankruptcy can require a court-appointed trustee to control and oversee all aspects of your personal estate. Bankruptcy can have an adverse affect on your credit rating and lifestyle long after the legal matters are over. This is not a decision to be taken lightly. Bankruptcy is an option that should only be explored as an absolute last resort to solving your financial problems.

Option 4 - Debt Negotiation and Settlement Programs

Debt settlement programs provide their customers with a viable solution to an otherwise complex problem. By helping eliminate your current debt, Debt Settlement programs allows you to regain control over your financial affairs and allow you to become debt free within a reasonable time frame. Debt settlement is fast becoming the only true option to financial recovery! However, I will say it again, even in Debt Settlement you have to pay you bills on time; anything else will cause your credit score to suffer.

Debt settlement is not a Consumer Credit Counseling Service or a consolidation loan. Debt settlement is a legitimate and legal way of solving your debt and credit problems without the need for bankruptcy. Detb Settlement programs were designed to lower your current debst by 40-60%. Traditionally, this is accomplished by negotiating approved payoff amounts with your creditors. A Debt Settlement program can typically be completed within 36 months or less and eliminate most, if not all, of your current debts.

Alan Barnes
IAPDA Certified Debt Arbitrator and
President and CEO of Debt Regret
http://www.debtregret.com