Collection Accounts or Not – 4 Options For Getting Out of Debt

There are essentially 4 ways to go when it comes to getting out of debt and being debt free. When it comes to these 4 options, you need to know the credit standing of each of your credit accounts. Are you in collections or not is what you need to know.

My Debt Is Not In Collections

If your debt is not in collections you have several choices to look at when it comes to your options to getting out of debt.

Contact Your Creditor First – Chances are, if your debt has not gone to collections then you may still have a chance to work something out with the original creditor of your account.

For excample if you owe a credit card company money but have missed a few payments you should get on the phone with them to see if you can work something out. This is very important to minimizing the damage that can be done to your credit report.

The original creditor can change what they report to the credit bureaus if you can come to some agreement with them about paying the debt you owe them.

Make sure that you ask them to change the status of your account information that they report to the credit bureaus to something like "paid as agreed" etc.

Consider Credit Counseling – Credit counseling only works if you haven’t starting missing payments.

If you have already fallen behind on your payments then consumer credit counseling will most likely not be an option for you as most collection companies won’t work with consumer credit counseling services. But, if you have kept up with your payments then a credit counseling service could be just the ticket.

In short, credit counseling will negotiate lower payments through interest rate reduction perhaps even to 0% interest – perhaps some principal reduction, and may be able to get late fees and penalties waived.

My Debt Has Gone To Collections

Debt Settlement Services – Debt settlement services can work for you if you are already in collections. A reputable debt settlement company should not work with you if your credit is still good. Also, a good debt settlement company should also never tell you to stop making payments on your credit accounts. See What Is Debt Settlement for more information about the option for getting out of debt.

Bankruptcy – As a last resort to getting out of debt you could look at bankruptcy.

Bankruptcy is not for everyone as it takes years to recover from. But bankrutpcy does offer a "clean slate" so to speak as it does wipe out all of your unsecured credit accounts such as credit cards.

If you are considering bankruptcy as an option you will need to do your home work and do some planning as it takes at least 6 months to get ready to file due to the required bankruptcy and money management counseling and filing cycle.

Make sure you speak to a bankruptcy attorney to see if this option for getting out of debt is right for you.

Our hope here is that if you are finding yourself looking for options to get out of debt no matter whether it is good debt or bad debt that this article would provide some insight into your options so that you can make better decisions about your financial future.