If you’re overwhelmed by debt, you will not get relief if you continue to do what you’re doing. You need professional help. You’ve heard of debt relief, but you aren’t sure how that works. Well, we’re here to tell you how debt relief services can pluck you from the financial doldrums and put you back on track.
What is Debt Relief?
Multiple strategies under this umbrella can make debt easier to handle. The one you choose may depend on the kinds of debt you have and what you’re paying in interest. Your options may include interest rate reductions, changes to repayment terms, lowering the principal amount owed, loan refinancing or consolidation.
When You Should Consider Debt Relief
You may want to think about it if you’re delinquent on your credit card or other unsecured obligations such as personal loans or medical bills, or you’re struggling to make even minimum payments. You may also be a good candidate if you’ve tried to handle things on your own and your efforts aren’t cutting it, or if you’ve mulled filing bankruptcy.
By the same token, debt relief may not work for you if you’re still spending away, or if you won’t buckle down and make a long-term commitment.
Debt Relief Through Consolidation
This may work for you if you have, say, multiple high-interest credit cards. If you can qualify, you can take out a loan with a better interest rate than what you’re now paying and use it to pay off those debts. Because you’ve consolidated your balances, you’re left with just one monthly payment of a fixed amount.
You can also consolidate your debt through a balance transfer. Credit card issuers sometimes offer a 0%-interest card for an introductory period of around 12 to 18 months. You can shift your-high interest debt onto this card and make just one monthly payment. The rub is you must be able to pay your transferred accounts off before the old rate kicks back in.
Debt Relief Through Debt Settlement
Debt settlement is another viable option on the debt relief services front. This involves hiring a company to get your creditors to let you satisfy your debt for less than you owe. Creditors are generally motivated to work with you since they know your next move is likely bankruptcy, which could net them zilch. How it works is that rather than paying your creditors directly, you deposit funds monthly into an escrow-type account from which monies will be drawn to support each settlement. Yes, the process of debt relief will at first affect your credit, which isn’t great right now anyway. Once your debts have been cleared, and your spending is reined in, your credit scores will rebound if you keep up your good habits.
Debt Relief Through Credit Counseling
You may be in too deep for this financial strategy, but credit counseling is available to assess your spending and obligations, then help you create a customized plan to deal with both. You can also get some expert advice on budgeting problems that may have helped get you into trouble in the first place. Such firms should have accreditation with the National Foundation for Credit Counseling or the Financial Counseling Association of America.
Debt Relief Through Debt Management
The credit counseling agency may suggest you enroll in a debt management plan in which you group several credit card debts into a single, lower monthly payment. That payment will be distributed among your creditors, according to the plan terms. You will have to live without your plastic during your years-long program however, and you’ll be asked not to open any new cards.
Now you know how debt relief services can help you. Don’t delay — get started on your situation today.