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If you have been searching for a proven way to get relief from your credit card debts, you are not alone - perhaps you have been considering a debt consolidation loan. Many Americans these days are also looking to get relief from debts - from credit cards and other personal unsecured debts - including medical bills, department store charges, or even utilities. The good news is, there are several options available to you that could help you reduce your debts and regain control of your finances.
Your debt relief options include: debt consolidation loans, debt consolidation through credit counseling, debt settlement, and bankruptcy. Depending on the type of debt that you have, one of these debt relief solutions may be able to provide much-needed debt relief and potentially save money by helping you payoff debt or get out of debt faster.
To find out how debt relief can help you, request a free debt relief analysis and savings estimate. Begin now.Understanding Debt Consolidation
What debt consolidation typically involves is combining or consolidating credit card and unsecured debts into one, more affordable, and more manageable monthly payment made to a credit counseling agency. Some people also refer to debt consolidation as a debt management plan, or DMP.
The process of consolidating your debts typically begins with a one-on-one with a credit counselor who will assess your finances - taking into account your debts, income, and other obligations. When credit counselors have all the financial information that they need, they will typically put together a game plan that lays out the next steps for reducing your debts. They submit proposals (on your behalf) to creditors asking for reduced interest rates, or the waiving or elimination of any late fees or penalties. Creditors that agree to the proposals are placed into the debt management plan.
With one, more structured, and more affordable payment plan, the goal is to direct more of your payment towards paying off the principal of your credit cards rather than just the interest. Eventually, this form of debt relief helps reduce your debts sooner than if you continued making the monthly payments on your credit card debts at higher interest rates.
If you are interested in finding out how much you can save every month through debt consolidation, request a free debt relief analysis and savings estimate - at no obligation to you.
A debt consolidation loan is also another way that many consumers have found relief from their high-interest credit card and unsecured debts. Instead of having multiple, high-interest debts to deal with every month, many consumers end up with only one, lower interest loan. However, keep in mind that a debt consolidation loan involves taking unsecured debt and paying it off with funds that come by way of a "secured" loan.
What this means is, it is a loan where you have to put up your home or other asset as collateral - and if you default on the terms of your loan, you would put your home or asset at risk. In addition, many consumers who get approved for a debt consolidation loan generally end up using their credit cards again. As a result, many of them will have new, high-interest credit card debts to deal with on top of their loan. Under this scenario, a debt consolidation loan has generally made their debt situation go from bad to worse.
In comparison to a loan, debt consolidation provides you with a more manageable, more structured, and more affordable payment plan that is designed to help you pay off your debts sooner than if you only continued to make your minimum payments at higher interest rates.
That's why it makes sense to find out how much savings you can potentially get by consolidating your debts and paying them at a pace that you are comfortable with.
Start by requesting a free debt relief analysis and savings estimate - at no cost to you.
Debt consolidation is a debt relief option allowing individuals to combine or "consolidate" multiple higher-interest credit card, or other unsecured debts (such as medical bills, store or gas cards) into a single, more affordable payment each month. Typically, debt consolidation programs are coordinated by debt counselors who customize a "debt management plan" providing consumers with a proven and predictable path to get out of debt.
If you have multiple credit cards and other unsecured debts like medical bills, doctor bills, store cards, unsecured personal loans, and more – a debt consolidation program coordinated through a debt counselor may be the ideal debt relief option to help you live within a set budget, reduce debts, and get on a path to become debt-free.
How do debt consolidation programs, or debt management plans work?
Typically, debt consolidation programs are coordinated by debt relief specialists, or debt counselors, who conduct brief interviews with you to get details on your credit cards and other debts, as well as how much you can realistically afford to pay each month to get out of debt.
Based on this information, your debt specialist will then customize a "debt management plan" for you. Once you approve the plan, letters will be sent on your behalf to each of your creditors requesting the benefits of debt relief – such as lower interest rates, a waiving of late fees and penalties, and generally more favorable repayment terms. Those creditors who accept the proposals are then added to the debt consolidation or debt management program. For those that do not accept debt relief proposals, you are still obligated to live up to the original terms of your cardholder agreement.
It's important to understand that, just as no two debt situations are exactly alike, no single debt solution is right for everyone. Your debt specialist can provide more details regarding debt consolidation or debt management as part of your free debt relief analysis and savings estimate.
Debt settlement is a debt relief option that has become increasingly popular among people who need relief from high-balance credit cards (typically $20,000 to $125,000 or more). Through debt settlement, debt specialists negotiate with creditors on your behalf – with the goal of "settling" your credit card debt for substantially less than you currently owe.
If you have one or more high-balance credit cards and are going through financial hardship – credit card companies may agree to "settle" your credit card debt for substantially less than you currently owe.
How does debt settlement work? A debt relief specialist will review your current credit card debts and the amount of money you can afford to set aside each month to accumulate a "settlement fund". Debt specialists will then negotiate with credit card companies on your behalf with the goal of settling debt for substantially less than you currently owe.
How much debt settlement could potentially save depends largely on the amount of credit card debt involved, your current financial circumstances – and the settlement policies of credit card companies.
It's important to understand that, just as no two debt situations are exactly alike, no single debt solution is right for everyone. Your debt specialist can provide more details regarding debt settlement or debt negotiation as part of your free debt relief analysis and savings estimate.
There are many well-respected self-help credit and debt experts who provide a wealth of valuable advice on the wise use of credit and how to become debt free – experts such as Dave Ramsey, Suzie Orman, Clark Howard, and many others. But regardless of the system you follow – the first step in a successful do-it-yourself debt relief program is to do everything possible to live within your means – avoiding unnecessary "impulse" purchases that cause debts to spiral out-of-control. By creating and maintaining a realistic budget, you will avoid taking on additional debt.
In addition, you can take steps on your own to reduce existing debt by contacting creditors directly to request more favorable interest rates or terms, or offer to settle debt for less than the full amount owed.
The bottom line: If you have high-interest credit cards and other debts and are struggling to make ends meet – you are in need of debt relief. Whether you take advantage of a debt relief program such as debt consolidation or debt settlement, or commit yourself to take control of your finances and negotiate with creditors on your own – take positive steps today to get on the path to become debt-free.
Bankruptcy is generally considered to be the debt relief option of last resort. There are several types of bankruptcy: Chapter 7 (straight bankruptcy or liquidation), Chapter 13 (reorganization of debts), and Chapter 11 (debt reorganization normally used by a business or partnership). While a successful bankruptcy can provide a fresh financial start – individuals or businesses should carefully consider bankruptcy before proceeding because of its long-term financial implications.
While bankruptcy is a debt relief option that has been able to provide a fresh start for many individuals, families, and businesses – it is a serious decision that should be carefully considered with the assistance of a financial advisor or attorney who can help determine if bankruptcy is the proper course of action.
Prior to 2005, those filing bankruptcy could choose the type of bankruptcy they preferred – and most elected to file Chapter 7 straight bankruptcy (liquidation) over Chapter 13 (structured repayment). However, rules enacted in 2005 now requires those filing Chapter 7 to pass a "means test" – to qualify, they must earn equal to or less than the average monthly income for a family of their size in their state.
In addition, before you can file for Chapter 7 or Chapter 13 bankruptcy, you are now required to complete credit counseling with an agency that has been approved by the United States Trustee's office.
While bankruptcy plays a vital role to help rescue individuals and businesses, it is important to recognize that it's not the only debt relief option. A debt specialist can provide more details on debt relief alternatives to bankruptcy as part of your free debt relief analysis and savings estimate.