What Are The Best Option Of Debt Settlement?

By Author: Louis Meyer
Total Articles: 30
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Debt settlement is a challenge which many of us face during the course of our life. Nowadays it has become more prominent with the downturn in the economic scenario across the globe. Credit Card debt, mortgages or short term loans taken to tide over exigencies can all come to haunt you if you are short on cash. There are some ground rules to debt settlement. These include outflow of lower interest rate, cleaning-up your credit report and improve credit history and credit score and finally ensuring that debt is under control. There can be no one best approach to the problem. It will depend on individual preferences and how much debt one has in their portfolio. Let us tackle the problem for an individual who has taken a mortgage beyond means. The reason for the mortgage was to make quick money in the real estate boom. However this was not to be. Apart from this, the person had an outstanding credit card debt of $10000. Now what is the best approach in this type of a situation. Credit Repair can start with mortgage loan modification.

There are two reasons for this approach. The first reason is that the credit card dues ...
... are less comparable to the mortgage outstandings. Moreover the credit relief advisor can work out a credit relief debt settlement with the bank or financial institution, brining the outstanding amount further down. At the same time if the mortgage is not settled quickly this person can lose his home and have no place to stay. To tackle this problem head-on, the advisor needs to go in for mortgage refinance. This is one of the most simple ways to bring immediate relief. This will ensure that the interest on mortgage payment is less and also the terms of repayment can be negotiated.

Many of us do not want to go for FHA loans. However this is one of the best ways to ensure lower interest rates. The problem starts when people want to get things done quickly and opt for mortgages or loans at high rates of interest. People with bad credit histories also form part of that queue. As a result the financial institutions charge a high rate of interest to hedge the risks of non-payment. So, if you want to escape all those harassing collection calls always opt for a FHA loan for housing needs. Though it may require a little more documentation, it is one of the better options. The downpayment for a loan can be as low as 3%.

If you are having any short-term loan, loan modification programs can work well. However the advisor needs to suggest the priority in which debts need to be resettled. In the current economic scenario, there are many people who may fall into a debt trap. The secret is to stay calm and chalk out your strategies. A knee-jerk reaction will not help at all. A good credit relief advisor can help you through the debt settlement program and ensure you come out stronger from the storm.
Louis Meyer is the author of this article on Bad Credit Repair. Find more information relating to Debt Settlement, and Credit Card Debt Settlement here.