Debt Settlement is the quickest and least costly option to get out of debt without filing bankruptcy, but having said that it is still one of the biggest decisions to put forward. Debt settlement also gives the individual or the family the ability to take charge of the program and control his or her own destiny. Client dictates the program duration, unlike bankruptcy whereas the courts decide everything. We understand the nervousness of change and our professionals will make every client feel like family.

Prior rules under Chapter 13 required people to dedicate all of their disposable income (what they had left after paying their actual living expenses)to their repayment plan. Unfortunately, the new law requires you to cover all your bases. Although Chapter 13 filers still have to hand over all of their disposable income, they have to calculate their disposable income using allowed expense amounts dictated by the IRS and not their actual expenses. If their income is higher than the median in their state, these expenses are often lower than actual costs. These permitted expense amounts subtract from the filer's actual earnings each month, not from the filer's average income during the six months before filing. This means that debtors may be obligatory to pay a much larger amount of "disposable income" into their plan than they actually have to spare every month, which, in turn, means that many more Chapter 13 plans will fail. Under the new law, you must value your property at what it would cost to replace it from a retail vendor, taking into account the property's age and condition. This requirement is sure to raise the value of property, which means more debtors stand to have their property taken and sold by the trustee. Furthermore, the financial impact is severe; a bankruptcy will stay on your credit report for 10 years. Every time you apply for employment, credit, whether it is a home, a car, a lease, or insurance, you are impacted. The long-term effect of higher rates many times greatly outweighs the short-term impact of filing bankruptcy. Most people do not realize that bankruptcy can stay on their court records for over 20 years, which means it can follow someone for the rest of their life. If you apply for a job, a loan, rent an apartment, or even insurance your bankruptcy filing is easily uncovered. Not all debts discharge through bankruptcy, such as:

• Debts resulting from fraud
• Alimony
• Fines from traffic tickets or debts that result from criminal negligence
• Debts from willful or malicious injury to another person or their property
• Child Support
• Student Loans (Currently, student loans cannot be discharged unless the individual passes an undue hardship test. The individual has to prove that they made good faith efforts to repay the loan and prove that they cannot maintain a minimal standard of living if you were forced to repay the loan)

A Debt management, by the standard financial definition, involves a designated third party assisting a debtor with repayment of his or her debt. Debt Management Plans (DMP) are designed to help people with high interest rates get their financial situation under control. A simpler definition of a DMP is a structured repayment plan set up by a designated third party as a result of personal initiation. DMP Program is a good resolution for clients, who are comfortably making their minimum payments, have an emergency fund for their family and do not need or use their credit cards to cover any monthly living expenses. Past due accounts over 30-60 days are not recommended for DMP. Many universities, military bases, credit unions and housing authorities operate nonprofit financial counseling programs. A number of them charge a fee for their services. Creditors may be willing to accept lesser payments if you are working with a reputable program to create a debt repayment plan.

Also known as a consolidation loan, debt consolidation is the substitute of several loans with a single loan, often with a lower monthly payment and a longer repayment period. Regarding debt consolidation, the Federal Trade Commission states, that a consumer may be able to lower the cost of credit by consolidating debt through a second mortgage or a home equity line of credit, but these loans require the home as collateral. If you cannot make the payments, or if your payments are late, you could lose your home. What's more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay "points," with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit. Source: Federal Trade Commission, "Facts for Consumers" Therefore, by consolidating your unsecured debt with a home equity loan, you run the risk of losing your hard-earned assets if you default on your payments. You will still pay the full balances on your unsecured debt and must have a low debt-to-income ratio to qualify.

This is the easiest solution for all, but it is not a sensible one. The only way one can change a situation is by acting upon the problem. When you are in a struggle to make minimum payments on your unsecured debt, you must look at all your options to determine which is going to free up your cash flow problem. Most of us are hopeful by nature, and since it is quite normal to experience financial difficulties in life, many people just ignore the problem and hope things get better down the road. Unfortunately, when buried under excessive personal debt, things will rarely get better on its own. If you are barely able to pay the minimums each month, this is a sure sign you are already in danger. In addition, if you have borrowed from one card to make payments on another, that is a recipe for financial cancer. A household budget that is stretched to the limit like leaves no room for the unexpected. One little bump in the road and you have set foot on the slippery slope toward financial ruin. Once you start missing payments on your credit card obligations, those 7.9% interest rates that seemed so attractive suddenly jump to 22%, 25%, even 30%. Procrastination adds fuel to the fire. The problem will not get better on its own, and you cannot expect sympathy or understanding from your creditors. It really does not matter if you have been a devoted customer and made your payments on time for 20 years. Once you start falling behind, you will learn that the banks are not sympathetic when clients are down. They are in business to make profits for their shareholders, and most of those profits come from people trapped in the cycle of nonstop minimum payments.