As credit card companies continually increase rates and gouge their customers, debt settlement or debt management is becoming more popular. Debt settlement is the process of eliminating a portion of the debt and establishing a repayment plan that will get you debt free in just a matter of months or years. Most credit card debt could take nearly a lifetime to pay off, so seeing relief in just a few months or years is a huge opportunity for most people. 

But debt settlement is generally only for unsecured debts. Other debts, such as car loans, or mortgages are not included. This is because these types of loans have collateral to back them up. If you don't pay, the lender will simply take away the car with repossession, or the home, with a foreclosure. One option to eliminate these debts or to pay them back on a more affordable schedule is bankruptcy. The main problem with bankruptcy is the amount of time it stays on your credit. In most cases, debt settlement and a loan modification would be considered better than bankruptcy.

A loan modification is similar to debt settlement in that a portion of the mortgage debt may be eliminated and new repayment terms are structured to make the payment more affordable.  This can be done by extending the term of the loan and/or lowering the interest rate. A loan modification is considered one of the best alternatives to foreclosure if you want to keep your home. It will make your home affordable again and has very little effect on your credit. In fact, it should begin to improve your credit, assuming you have not done anything else to mess it up.

To qualify for a loan modification, you will need to prove that you have experienced a hardship and that a modification would make your mortgage payments affordable for the remaining life of the loan. Many lenders will want you to be behind on payments before approving a loan modification, but that is not required. Even if you are current, if you can show that the payment is not affordable, a good negotiator should be able to get it approved.

A loan modification should be applied for at the same time as debt settlement. Ideally you want to show all your creditors improving your payment terms. Asking all your creditors to improve a little, is easier than asking one of them to reduce their payment a lot.

In any situation, your credit will be effected to  some extent, but when you are no longer able to make your payments, ,or if you have already missed payments, then you wont be approved for new credit anyway. Most people only use their credit once every 4 years, so this will give you plenty of time to improve your credit and become debt free. This is much better than a bankruptcy that can remain on your credit for 10 years.

Contact us today to find out if you qualify for a debt settlement or debt management program. Foreclosure and Loan Modification information can be found at http://www.foreclosurefish.com.