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You Can Evade Bankruptcy with Debt ManagementSome consumers facing financial disaster still consider bankruptcy as an option to eliminate their debts though it is ineffective. In 2005, Congress drastically changed the bankruptcy laws creating more barriers to filing and more stingent regulations. Bankruptcy is no longer a simple debt-relief solution. Two other debt management alternatives provide greater efficiency: Debt consolidation and debt settlement. Debt consolidation involves consumers obtaining a loan and using the proceeds to pay off all high-interest debts. This method allows consumers to reduce interest costs and make payments to only one creditor. Debt settlement programs, in comparison, help consumers with debt problems by working with creditors to reduce the total principal debt. Consumers repay a portion of the total credit card debt, but creditors accept the partial payment to settle and close out the outstanding account. Debtors can regain control of their financial situation with debt settlement programs by saving money to repay their debts, and help them avoid bankruptcy. Creditors are more willing to work with debt settlement companies because they recover funds that would otherwise be lost if consumers filed for bankruptcy. The creditor only receives a portion of the debt - usually much of the original principal - but they accept a portion rather than the possibility of nothing at all through bankruptcy. Debt problems can engulf consumers, but they can eliminate these problems while avoiding bankruptcy, with either a debt consolidation loan or a debt settlement program. Both methods provide consumers better alternatives to handling credit card debt and improving their future finances than bankruptcy. Author Bio: Allison Roberts is a graduate of the University of North Texas Department of Journalism. She has experience in agency and in freelance public relations. Allison currently writes for MyUSADebt and she is completing an unfinished work of her late grandfather. For more articles by Allison on bankruptcy visit http://www.MyUSADebt.com. MyUSADebt offers a leading debt consolidation alternative.
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