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Simple steps to obtain debt relief

In Washington, District of Columbia, and elsewhere throughout the U.S., debt is a major concern. Many Americans owes debt from credit cards, student loans, mortgages and personal loans. Debtors do everything they can to pay these debts to avoid huge interest rates and creditor harassment. However, the ability of a person to pay debts can be affected by unexpected life challenges, including divorce, the death of a family member or a serious medical condition. When debtors fall behind on payments, they may find it difficult to get back on their feet without seeking debt relief.

People dealing with insurmountable debts should first consider talking to their creditors. Some creditors are willing to provide a repayment plan to honest debtors who have fallen behind payments. This alternative has no costs and does not damage an individual's credit rating.

Another option is to employ a credit counseling service. There are nonprofit organizations that provide free counseling to consumers and work with creditors to establish a repayment plan. Debtors may also take a second mortgage, allowing them to consolidate their debts. Individuals should be careful when using this method however, as their house will be used as collateral and is subject to foreclosure if this method fails.

If debtors have used all these options and are still dealing with huge debts, it is time to consider the last option -- filing for bankruptcy. Although filing for bankruptcy can damage a person's credit score, the process is supervised by federal courts and is the safest way to deal with debts. Debtors can start building their credit score once bankruptcy protection is finished.

Individuals who are considering bankruptcy may wish to seek legal advice to better understand the process and learn how it can help them obtain a fresh financial start.

Source: Federal Trade Commission, "Debt relief or bankruptcy," accessed on Feb. 19, 2015

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