Debt relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations.

 

You may find yourself in need of debt relief if you are in financial trouble due to owing more money than you can pay right now – if your credit card debt has mounted up due to your loved one's manic spending sprees, for example.

It is estimated that the average US household has $19,000 in non-mortgage debt. With such large debt loads, many individuals have difficulty making repayments on debts and are in need of help.

There are many companies who offer debt consolidation services. However, such services may not always be in the best interests of the person involved and may involve taking out a loan secured by a person's home. Marketing materials are designed to persuade customers to take up the company's offer rather than offering a personal best solution for reducing debt.

Where debt relief has become a problem, it is often best to turn to an independent consumer's association for advice before calling debt consolidation companies, as consumer's associations often have great experience with such problems and may be able to advise the most effective avenues for debt relief- for the price.

As long as some form of Chapter 7 bankruptcy debt relief exists within American law, the credit card companies must pay attention, and do as much as they can to help their clients repay debts through relatively traditional means (depending upon the service those clients have entered).

Even leaving bankruptcy aside, it is in the best interest of credit card companies that their debtors at least feel some motivation to continue repaying their accounts and not simply disappear or view those ever growing balances as untouchable.

The primary mechanism of debt relief today is bankruptcy, where a debtor who cannot or chooses not to pay their debts files for bankruptcy and renegotiates their debts, or a creditor initiates this.

As part of debt restructuring, the terms of the debt are modified, which may involve the debt owed being reduced. In case the debtor chooses bankruptcy despite being able to service the debt, this is called strategic bankruptcy.

Certain debts can be defaulted on without a general bankruptcy.  These are non-recourse loans. Choosing to default on such a loan despite being able to service it is called strategic default.

There are other forms of debt relief besides bankruptcy; including: debt consolidation and debt restructuring.

SOURCE:  www.wikepedia.com