Paying Minimum Monthly Payments |
|||
18% Credit Card |
Debt Consolidation Settlement Plan |
||
| Total debt | $100,000.00 |
$100,000.00 |
|
| Monthly minimum | $3,500.00 |
$2,765.00 |
|
| Months to be debt free | 286 |
20 |
|
| Interest paid | $70,286.27 |
||
| Total paid | $170,286.27 |
$55,300.00 |
|
Above are quick examples of estimated monthly payments :
Eliminate $100K in unsecured debt.
Many people today have high unsecured debt, but it is all relative to the person's situation. Some people have $5,000 in credit card debt and the minimum payments are just out of control for them. The debt seems overwhelming and anything more than that in just unbelievable for them.
Other people have the $20K-$100,000 range in debt, and along with their other monthly bills, the credit card and personal loans are the breaking point where they can no longer stay afloat.
Then there are the situations when the person or family has over $100,000 in unsecured debt. What options do they have ?
- What is more important: monthly benefit or long term benefit ?
- What is more important: getting out of debt or your credit score ?
- What you can afford to pay on a monthly basis ?
Debt solutions depend on a few things:
Never attach "unsecured debt" your your home, by paying off credit cards, personal loans or medical debt. That will just turn that amount of debt into "secured debt". If you default on it, then you risk losing your home.
If you default on unsecured debt, the creditor can worst case sue you, but they can only get a judgement against you personally, not your home. With a judgement they can sometime levee associated accounts or garnishments right out of your paychecks.
So with high amounts of unsecured debt like $100K, $140...$200,000 or more you really only have a few options.
- You can try to work it out with your creditors directly.
- You can try and file BK. But bankruptcy is sometimes hard to even qualify for.
- Or you may be able to qualify for a debt settlement program.
Working with your creditors directly can be difficult with that amount of debt, normally either they want a settlement within 30 days or they will work out payments that pays mainly their interest and financing fees.
Bankruptcy is a much longer lasting effect to your credit, normally from 7 to 10 years and worse never leave public record, since it is filed through the court systems.
So if you are trying to buy a home, a investment property, or business venture including licensing you may no longer qualify with a bankruptcy on your record. It might be the difference between you and someone else getting a job.
It is also harder to qualify for chapter 7, 11, and 7 bankruptcy nowadays, since they have changed the laws.
Now the Pro's of debt settlement would be that you can lower your unsecured debt by 30-60% percent, lower your monthly payments up to 70% or more, and get out of debt with in under 3 years.
The Con's would be, that there will be a negative effect to your credit score, normally the effect can be fairly short after your program on your scores and the derogatory info and stay for years. But if you have debt outside the program that you go behind or default on, that will negatively effect your credit scores too.
Another con would be that the monthly payments can be high.
But with a settlement plan your monthly payments are going towards your settlement, which is a fraction of your debt, an not monthly compounding interest.
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Here are a few examples of estimated monthly payments :
Paying Minimum Monthly Payments |
|||
18% Credit Card |
Debt Consolidation Settlement Plan |
||
| Total debt | $150,000.00 |
$150,000.00 |
|
| Monthly minimum | $5,250.00 |
$2,770.00 |
|
| Months to be debt free | 318 |
30 |
|
| Interest paid | $105.548.14 |
||
| Total paid | $255,548.14 |
$83,100.00 |
|
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Unsecured…
- Credit Cards
- Personal Loans
- Lines of Credit
- Auto Reposessions
- Collection Accounts
