Making decisions that are the best for your circumstances ranks highly in situations such as being heavily in debt and finding a way to reduce the debt load.

Pennsylvanians face a growing statewide unemployment rate and a poverty rate of close to 13 percent. The state's median household income is about $1,000 lower than the national average. Many people end up with staggering debt and even bankruptcy.

There are lots of options out there to reduce or eliminate debts (such as declaring bankruptcy), but are those options ones that are going to work? For instance, what about debt consolidation? Is it a good idea? It may be, depending on your circumstances.

Debt Management Plans

• Speak with a credit counselor: They can talk to credit card companies and get rate reductions because those companies would prefer to keep your business than lose you as a delinquent account and recoup zero funds. The debt management plan the counselor creates for you consolidates all monthly payments into one payment per month. This can take up to seven years, depending on the circumstances of your case, so you may want to consider other options.
• Debt consolidation loans: These types of loans may be a good alternative to credit counseling. When you get a loan, your lender pays off existing ones and refinances your debt, so you are only making one payment a month to your debt consolidation lender. Debt consolidation can use different types of loans such as home equity, personal loans or credit card balance transfers. Debt consolidation does not affect your credit since you are paying your debts in full. Make sure to make your payment on time and stay on budget to achieve your goal(s).
• Debt settlement: This can be an alternative route to paying off all debts. When a debtor enrolls in a debt settlement program, they immediately start to save for a lump sum payment to eliminate their debt. While the debtor is committing to pay their debt off, they do not make payments on existing debt. This process may affect your credit score for a time, but the result is living debt-free.

Depending on your circumstances, any one of the above Debt Management Plans may be an excellent route to go depending on the circumstances and the amount and type of your debts. However, in many instances, it may be better to file a bankruptcy. Before taking any steps with either any Debt Management Plan or a Bankruptcy, talk to Melaragno, Placidi & Parini to find out all of the ramifications of the various options open to you. Your first consultation is free. Contact us to talk about your situation and figure out the best way forward. Give us a call at 814-452-2222.