You will have already done considerable damage to your credit and debt situation when you fall behind your debt repayment schedule due to any sudden financial hardship. In such situation you may look for effective ways to deal with the situation and come out of your debt. The most common option that comes to the minds of the people in such situations is settling their debts with the creditors for a lower amount.

However, the fact that there are no guarantees to the success of such approach may push you and your debt into a further awkward situation. This is because:

• The creditors have the legal right not to agree to your settlement proposition altogether or
• They may not agree to the amount that you may have hoped to offer them as a full and final settlement of your debt.

Therefore, to make the best use, you will need to know about all the available options of debt relief. There is no need to be disheartened when you are refused by your creditor for one approach. You can visit a number of reliable and reputable websites for debt relief such as NationaldebtRelief.comand others and you will come to know a whole lot of debt relief options.

Debt settlement

Debt settlement is the best option if you are deep in debt but do not have any or can make any arrangements to make enough money to pay it off in full. In this process:

• You will work with debt settlement firm or a counselor if you do not want to work on your own
• They will get in touch with all your creditors on your behalf
• They will negotiate with your creditors on your behalf provided they permit and try to arrive at an agreement
• They will reduce your debts so that you pay off a specific percentage of your outstanding debt but you will get a reduced interest rate and
• The counselor will frame a payment schedule or you may make one large payment.

Debt settlement will appear on your credit report and will stay there for 3 years when you complete making payments and the forgiven amount will be considered as taxable by the IRS or Internal Revenue Service. Therefore, this is not always the best option especially if you do not want a negative thing on your credit report.

Debt consolidation loans

If you have a number of high interest credit card debts or any other loans the debt consolidation loans can be a great option for you. The primary objective here is to get a larger loan with a lower interest rate. You can use the money to pay off all your other debts and payless interest in the process. You will also have to pay to only one creditor now instead of multiple ones and too for a longer period of time.

There are the two kinds of debt consolidation loans available:

• Unsecured debt consolidation loan – This is the type of loan that does not required you to put up any collateral to avail it. An unsecured debt consolidation loan is the best option for you if you want to pay off highinterest debts. These loans are typically harder to get because these are unsecured. You will therefore need to have a high credit score to get it.
• Secured debt consolidation loan – This type of loan usually comes in the form of a home equity loan. In this your home acts as the collateral. This is another great option for you if you have a mortgage for which you have already paid off at least a small part of it. You stand at a risk of losing your home in case you fail to repay because your house is the collateral but this seldom happens in this type of loans.

Debt management programs

If you do not qualify for a secured or for an unsecured debt consolidation loan for any financial issues or for your low credit score, you can consider a debt management program to manage and come out of your debt as well.

In a debt management program you will also have the guidance and support of an expert and trained counselor which is an added advantage of this approach. You can make the debt management program work for you in these following ways:

• You can pay off all your outstanding loans in full
• You can qualify for lowinterest rates in spite of having a low credit score
• You can save enough money due to the lower interest rates
• You can make a simple and affordable monthly payment instead of paying to many different creditors
• You will come to learn a lot of ways in which you can manage your finance in a better way and
• You can become debt free in 3 to 5 years.

Since the debt management programs will teach you how to handle your finance, chances are you will never become astounded with debt again, though this is a hard route to take and requires a lot of diligence, patience, perseverance and sacrifice.

Bankruptcy as last option

Yes, you can choose to file for bankruptcy as an extreme measure to come out of debt. This is a legal process that is typically overseen as per the Bankruptcy and Insolvency Act. This is the process that provides debt relief if you cannot pay off your outstanding debts in culminationof the legal actions of your creditors. However, there are several disadvantages of it such as:

• You may have to surrender the assets that are not exempted from bankruptcy such as car, jewelry, and furniture
• This fact will remain in your credit history for 7 years making it difficult for you to get a loan or credit card or one at a low rate of interest and
• All your open credit accounts will be frozen once bankruptcy process starts.

Therefore, choosing a proper debt relief option can be difficult but if you are well informed it will make it much smoother.