The current recession is the worst which has hit the economy in many decades.
The common consumer, who is generally dependent on loans for everything from cars to homes, is facing unemployment and huge salary cuts.
Due to their financial situation, most debtors find it impossible to get out of the debt cycle.
In desperation many debtors contemplate bankruptcy.
But in the case of a bankruptcy your credit scores take a huge hit and it becomes almost impossible to get any more credit.
Your credit scores take at least 10 years to repair and the bankruptcy stays on public record for ever.
On the other hand the creditors realize that if a debtor is forced to pay money which he/ she does not have he will be forced to file for bankruptcy.
In this situation the financial institutions will lose all their money.
But if they offer relief to the debtor they will be saved from bankruptcy and the creditors will be able to recover at least part of their money.
Due to this fact many debt relief options are available to the common debtor in this market.
A debtor can opt for debt settlement.
In this process the debt is reduced to up to half of the original amount payable.
The negotiated amount can be paid as a lump sum or in installments.
The debtors can also request the creditors to reduce the interest charged on the negotiated amount payable.
The late penalty and non payment penalty charges can also be waived off.
This brings down the payable amount even further.
At the same time a debtor also has the option for debt consolidation.
In this process several high interest loans are paid off with one low interest loan.
This consolidated loan can be repaid in equated monthly installments.
There is also the option of converting high interest loans into low interest secured ones.
Many debt settlement companies offer to combine these methods.
For instance, a debtor can consolidate the settled loan and then convert it into a secured one.
In this way many debt relief options are available in today's market.