Is Debt Relief Right For You?

Is Debt Relief Right For You?

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While debt relief programs won’t suddenly erase your debts, they can help you take steps to reduce or eliminate your debt over time. Consider working with a debt relief company to negotiate with creditors on your behalf and potentially get your debt under control.

  • Do you have a large amount of unsecured debts like credit cards or medical bills?
  • Are you only able to make minimum payments due to finances being stretched too thin?
  • Is your debt causing concern, stress, or panic?

A debt relief program may be right for you.

How Does Debt Relief Work?

  • The debt relief company works with you to select the right debt relief options for you.
  • A debt relief company may negotiate with your creditors on behalf of you to reduce or eliminate your debt.
  • Consolidate multiple monthly payments down to one single monthly payment.
  • Although debt relief isn’t a magic solution to getting out of debt, it can cut through the chaos of due dates and collections calls.

Types of Debt Relief Options

Debt Consolidation Loans

  • Takes multiple debts and combines them into one loan.
  • Debt consolidation loans work best if you have:
    • Steady income
    • Discipline to not take on more debt
    • Good credit
  • Consolidating debt loans can reduce the stress of multiple payments, due dates, and creditors. You’ll only have to worry about making one payment.

Debt Settlement

  • Debt settlement can reduce the total amount of money you owe.
  • A special debt settlement account is set up in your name. You’ll make monthly deposits to the account so the funds grow over time.
  • The debt settlement company negotiates with your creditors to reach a legal agreement to settle your debts.
  • Debt settlement is the preferred option for many people who are not qualified for additional financing products.

Credit Counseling

  • Typically, credit counseling is a free resource provided by nonprofit financial education organization.
  • A credit counselor will work with you to help you improve your individual financial situation.
  • They may offer tools and resources to help you gain control over your money.
  • You may have fees reduced, but credit counseling doesn’t usually reduce the total amount of debt you owe.

A Last Resort: Bankruptcy

  • Used only if no other debt relief plan is possible.
  • In rare cases, bankruptcy may completely remove your debts. However, there are high legal and court fee costs to bankruptcy so you will likely still need to pay a hefty sum.
  • Bankruptcy can stay on your credit history for up to a decade and make it difficult to get approved for mortgages, car loans, and other credit accounts for years to come.
  • Many bankruptcies end with a creditor recouping some of the money you owe by liquidating your assets.

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