Advice on low credit score and bankruptcy alternatives - The Bills.com Blog

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Advice on low credit score and bankruptcy alternatives

Question: What options are available for person with low credit scores to avoid bankruptcy?

Answer: You have a variety of options to you if you have a low credit score and want to avoid bankruptcy. Generally, you'll have two types of solutions -- loans (e.g. a mortgage refinance) or services (e.g. credit counseling or debt settlement programs). Depends on what assets you own and how much you can affordto pay in a monthly payment.

Very quickly, if you want a free consultation with one of Bill's approved debt help partners, click here: Debt Relief Savings Quote

If you own a home, a secured debt consolidation loan may be right for you. This type of loan is essentially a home equity loan which is used to pay off your other creditors. Secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount. Unfortunately, with the recent tightening of the credit markets, obtaining a debt consolidation loan may be difficult given your poor credit rating. However, if you can find a loan that suits your needs, a consolidation loan may be a good option to consider. Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: http://www.bills.com/mortage/refinance/.

Another option to consider

is a Consumer Credit Counseling Service, or CCCS. CCCS companies offer numerous services, such as financial counseling and budget planning, as well as Debt Management Plans (DMPs). In a DMP, the CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. There are several drawbacks to CCCS, though. First, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. Second, it may have a negative impact on your ability to obtain a loan in the future. Third, the average DMP takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.

You may also want to consider the services offered by debt settlement firms. Rather than making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts

by 50% to 60% of your principal balances. These programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. In many cases they can also reduce your monthly payment toward your debt. There is one major drawback to debt settlement programs, though?they will significantly damage your credit while in the program and for at least a year or two afterwards. However, if you are currently unable to afford to pay your creditors, the hit to your credit may be worth the benefit of ridding yourself of credit card debt.

Depending on your income, credit score, and the type and amount of debt, one of the several options I have described above may be able to help you. I encourage you to explore the Bills.com website, http://www.bills.com/debthelp/, to read more about these and other options available to you.

I hope this information helps you Find. Learn. Save.

Good Luck,
Bill
www.bills.com

Also, make sure to get a free financial health check-up with Bills IQ!

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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