Debt Options

What Now? Consider other debt options.

For those consumers who find themselves over-burdened with debt, there are many seemingly attractive options available to you. These include, but are not limited to; debt consolidation, a home equity loan, Consumer Credit Counseling, or bankruptcy. Each of these options should be weighed carefully when pursuing debt resolution.

• Debt Consolidation:

   Debt Consolidation entails taking out a single loan to pay off many others. This action is often undertaken to secure a lower or fixed interest rate or for the convenience of servicing only one loan. For some, debt consolidation may be a viable option. However, for many consumers with large amounts of debt, the benefits are short lived and people may find themselves worse off following their consolidation. Why? Well, to begin, all of the debt that the consumer consolidated is still there. This option generally leaves consumers in a more vulnerable position since they may be tempted to continue spending - worsening their debt problems. On the other hand, a debt settlement program from DMB generally results in a significant portion of your unsecured debt being written off and makes use of self-help tools that keep you from getting deeper into debt.*

• Refinancing. Taking Out an Equity Loan:

   Many consumers faced with large amounts of unsecured debt will sometimes use the equity in their home to pay off unsecured debt. And, for a small percentage of consumers, this option may succeed. For most consumers, however, turning unsecured debt into secured debt is a risky undertaking by actually inflating their mortgage (principle and payments) without realizing a significant increase in cash flow. In addition, many people who find themselves overwhelmed with debt will not qualify (for a home equity loan) or will qualify with strict payment penalties and high interest rates. Conversely, a debt settlement program from DMB will generally relieve your unsecured debt in as little as 36 months - all without securing your home.*

• Consumer Credit Counseling (CCC):

   This type of program may be effective for people who have the will to get out of debt, can afford to make slightly higher monthly payments, and can make this commitment for the next 3 to 5 years. However, if you are already struggling to make minimum monthly payments, the odds are against you that you will succeed using this method. Once you begin this program, the Credit Counseling type companies inform your creditors that you have entered into their "hardship program." The creditor then allows the CCC, in some cases, to reduce the interest rate, which may lower your monthly payments.
  
  Keep in mind, however, that CCC organizations were originally set up by Visa as a means of recovering money from people who were starting to fall delinquent on their payments. In the end, they are not working for you, but for the credit card companies. And, they are not in the business of negotiating a settlement with your creditor(s) to write off a significant amount of debt owed - DMB Financial is.

• Bankruptcy:

   Filing bankruptcy, or Chapter 7, will completely absolve the consumer from any debt. While the stipulations of Chapter 7 vary from state to state; the most beneficial outcome of this action is that debt collection efforts must cease.
  
  Bankruptcy, however, has its downsides. To begin, this course of action will remain on your credit report for up to 10 years. In addition, the Bankruptcy Abuse Prevention and Consumer Protection Act enacted on October 17th, 2005, requires more from debtors, including pre-filing consultations with an approved consumer credit counseling service in an attempt to force consumers to pay their debts outside of bankruptcy. Additionally, in order to file, a debtor needs certification from that particular credit-counseling agency. Also, more documentation from the debtor will be required, subsequent filings will be discouraged, the waiting period between Chapter 7 bankruptcy filings will be extended from 6 to 8 years, and a debtor's final discharge will be subject to completing a course in financial management. Clearly, debt settlement offers a viable alternative to the long and arduous process of filing bankruptcy.

* DMB's debt settlement program does not assume or pay any debts, nor provide legal or tax advice. Individual results may vary based on ability to save funds, amount of unsecured debt, willingness of creditors to negotiate, and the successful completion of all program terms. Prudence should always be taken by consumers when reviewing contracts and disclosure materials. DMB's services not available in all states.

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