Card debt consolidating
Debt consolidation makes sense for people who want to make one payment each month instead of several, and for those who can lower the amount of interest they pay by taking the new loan.
You can figure out how long it will take to pay off your debt using a debt payoff calculator like this one from CNN Money.
One of the biggest pitfalls of debt consolidation is the risk of running up new debt before the consolidated debt is paid off.
When you finish paying off credit cards with a consolidation loan, don’t be tempted to use the credit cards with their newly free credit limits. You may have heard that doing so could hurt your credit score, and it might.
If you want to pay off debt fast, the best way is a two-pronged approach: Debt consolidation means taking out one new loan large enough to repay some or all of your outstanding debt.
The debt settlement process involves hard-core, long term debt collection attempts by your creditors, and serious credit score damage that will last for many years.
It won’t prevent you from getting credit in the future, but for a time some credit products will be unavailable to you and others will come at very steep prices.
Also, not all debts can be discharged in a bankruptcy. Collection accounts fall off your credit report after seven years.
In reality, credit card debt forgiveness is rare and tricky, and can be very costly. Then you have to convince your creditors that you don’t have the means to repay your debt and your situation isn’t likely to change.
If you manage to work out a debt settlement agreement, the creditor is all but guaranteed to report your forgiven debt to the IRS. The amount of tax you owe on the forgiven debt depends on your adjusted gross income and your tax rate.