Are you drowning in debt? Are thoughts of unsecured debt keeping you awake at night? For many consumers, debt relief is a viable solution to unmanageable debt. And it just may work for you.
Fortunately, there are several ways to reduce debt, interest rates and fees – and pay it off faster than you ever thought possible. This can be done by working with financial professionals who specialize in debt relief, who can negotiate debt reduction, lower rates with lenders, and help you with a budget that keeps you on the right course.
Some of the professional credit card debt relief programs that don’t require to take out a consolidation loan include:
Credit Counseling, or Debt Management Programs
If you have unsecured debt that you can’t pay, even at lower interest rates, there’s no need to panic. You still have options. A debt settlement is an arrangement made between you and your creditors to pay less than the amount owed, either in a lump sum payment or over time as part of an installment loan.
If you hire a professional debt relief company to negotiate on your behalf, you could settle your debts by paying potion of the total amount owed, as well as having any late fees and penalties waived. On average, people save between 40 to 60 percent of their total debt in a settlement agreement.
Debt settlement isn’t your only option if you have unmanageable debt. You might consider credit counseling.
A credit counselor will work with you to create a budget and better manage your finances so you can get a handle on debt. As part of this, a credit counselor may help you set up a debt management plan (DMP) that helps you pay one consolidated payment that you can afford.
A debt management plan may allow you to eliminate fees and late charges, and reduce interest on your debt. It most often does not reduce what you owe, but you will make lower monthly payments to pay the remaining balances. This is an important difference between a debt settlement and a debt management plan.
Additionally, a debt management plan requires that you include all your unsecured debt—even bills you’ve been paying on time. When you negotiate debt settlements, you can “cherry-pick” which debts you’d like to settle and which you’d like to continue paying on time each month.
What Could Happen if You Don’t Consolidate Your Debt
If you don’t make a decision to consolidate your debt, you’ll risk high payments, mounting interest that increases your debt, and you may eventually be forced into bankruptcy if you can’t pay your creditors.
If you’re in debt and struggling to make your monthly payments, take action now. Don’t wait for things to get worse. There is help available, and you have a variety of choices for debt consolidation.
Best of all, you can lower your monthly payments and get out of debt in just four steps.
Most times. The amount you have to pay back is determined by the creditors, not debt relief programs. Your debt consultants will have to negotiate with each of your creditors. Some creditors will reduce debts in exchange for a payment, some may not.
Some creditors will demand repayment in full, but many of them are willing to work out new payment arrangements. Some creditors will accept a lower amount; but it is usually 50% to 75% of what is owed, not pennies on the dollar.
Not right away. You will probably receive some calls that you will have to refer to your debt relief program. After this, the calls should cease because the collectors will be talking to your debt consultants – not you.
It might take some time for creditors and collection agencies to understand we are handling your case.
It can be very effective if you have two or three years to pay off debts, or are having money problems. Most creditors would rather enter into a settlement because it is cheaper and easier than direct collections.
Many creditors actually prefer settlements, because it means they might receive some money back. They know that without it you might declare bankruptcy which would leave them with nothing.
In many cases, yes. You will not have to go to court or hire an attorney with a settlement, but you will not be able to wipe out all of your debts either. Bankruptcy is a better option for people who owe a lot of debt which they have no means of repaying.
For persons with a steady income, a settlement is often a better deal because it has less of a negative effect on their credit rating.