When people use the term christian debt solutions, they are referring to debt management with a Christian perspective. Though they are guided by wisdom of the Bible, the principles are the same; manage debts through consolidation, settlement and counseling; prevent bankruptcy, eliminate phone calls from creditors and eventually bring the credit score back into good standing.
Consolidation
Done with the help of a professional or by the debtor, consolidation is a good strategy for lowering interest rates and wrapping unsecured credit into one payment. To lower rates, speak with creditors and make a request. Start with creditors who doubled the rate after the first late payment. If this is ineffective, transfer balances to the card with the lowest interest, or transfer to a new 0% offer card. Use caution when doing this and try to pay the balance off before the rate adjusts.
Settlement and Counseling
Ignorance, frustration, and confusion can all play a part in accumulating bad debt and ignoring them when they have gone to collections. The facts are, if a lender does not receive payment, the account will go to collections. If it can not be resolved, they will attempt to sue the debtor in court; it never just goes away.
If credit cards have gone to collections, settle them out quickly and move on. Collection agencies typically offer between 40 and 60 cents on the dollar. If it goes to court, a judgment may rule for the entire amount to be paid. Pay the discounted amount while you can and get a printout of the receipt, then move on to the next. Be sure to dispute any false claims with the help of an attorney.
When there is too much confusion, seek the services of a recommended or non-profit debt counseling service. They will guide their client through the process and create a schedule of payments the individual can afford.
Bankruptcy Pitfall
Many debtors are quick to assume their only solution is to file for bankruptcy. There are several types available, including chapter 7, which is total federal protection from creditors, and chapter 13, which is a court supervised payment plan to bring the debtor current. The pitfall of bankruptcy is the long lived marks it leaves on credit reports.
Even though debts included in a bankruptcy are discharged, the creditor can elect to leave the negative reports for seven years. The damage this can cause is not irreparable, but it is difficult to fix. Instead, spend the same years you would use fixing your credit after bankruptcy, and use them to resolve the issue before it gets to that. Bankruptcy can also effect the cost of future loans significantly; better to use the money to pay debts now.
Conclusion
The benefits of good credit have been well-known for centuries, and the Bible even counsels in Romans 13:8 to ‘leave no debt outstanding…’ In practical terms, mortgages will be less expensive, car loans will receive better interest rates, and individuals will start to qualify for credit and financing offers which were invisible to them before. So start now, and don’t allow debt to control your life any longer.
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