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Is debt relief the best choice for consumer debt?

Will debt relief services ruin your credit rating? This is a valid question asked by residents of Washington, D.C., every day. Those with a significant amount of consumer debt have a variety of options, including debt relief, elimination and settlement. Some of these decisions work in certain situations, but they are not applicable to every individual. It is wise to do your research before attempting to pursue debt relief.

Although debt relief companies may talk big, they often cannot provide the excellent relief to rebuild your credit that comes along with Chapter 13 or Chapter 7 bankruptcy. Debt relief groups seek to consolidate your debt over a period of three to four years. These organizations are often unreliable and not forthcoming about their own financial policies. In other words, 'buyer beware.'

Credit counselors, on the other hand, simply provide a financial educational service that is often required before filing for Chapter 7 or Chapter 13 bankruptcy. It is critical to find a reliable provider. Nonprofit credit counselors are generally the most credible. Credit counseling is a smart move for people who are considering filing for bankruptcy, as it can give an individual a more complete picture of their financial situation.

If credit counseling leads you to decide on bankruptcy, it is smart to consult with a qualified bankruptcy attorney in your area. Several bankruptcy options exist, including Chapter 7, which is a full liquidation of assets, and Chapter 13, which allows you to restructure your payments. Bankruptcy does have its trade-offs, but it can provide a valuable financial restart that can lead to monetary success in the future. Consulting a qualified attorney may help you determine whether your debts qualify for certain types of bankruptcy proceedings.

Source: Recordnet.com, "Debt-relief firms have dubious record" Anya Kamenetz, Feb. 02, 2014

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