Floridian residents who are in a financial bind may be tinkering with the idea of looking into debt relief options. There are many benefits to different methods of relieving debt, but there can be potential drawbacks as well. A person should be aware of both before making a decision.
Nerd Wallet takes a look at a number of different debt relief options. They include debt settlement, debt management, and bankruptcy. Debt settlement allows a person to negotiate a lower debt. They will then make monthly payments and accumulate a pay-off amount. However, there is a risk that their creditors won’t settle. This can harm their credit score in the long run. With debt management, a person is guaranteed that they will be free of their debt within 3 to 5 years. They pay off all of their debt with reduced interest rates, rather than reorganizing it.
Bankruptcy comes in different forms as well. For example, there is Chapter 7 bankruptcy, which is described by the United States Courts as being liquidation bankruptcy. It allows a person to liquidate valuable assets in order to pay off debts. Assets may include cars, property, expensive jewelry, or art. Chapter 13 bankruptcy, on the other hand, allows the person in debt to create a repayment plan which they then pay off over time.
All of these options have the ultimate end goal of helping to dig a person out of debt and keep them from falling back into it. The differences lie in how much a person is willing or able to spend upfront and whether or not interest rates or credit score damage are a big concern.