Top Debt Relief Solutions

You can hardly believe you’re in this situation, yet you’re here and it is high time you do something about it. The good news is that you have a variety of options that can, at length, give you a fresh start. Here are top debt relief solutions from which you can choose.

The Issue

If you’re in debt, especially during this protracted inflationary period, you have plenty of company. The average U.S. household has a debt, including mortgage, of $132,529, which is an 11 percent hike over the last 10 years. What’s more, auto loan and credit card debt now top $1 trillion, and those with student loans owe $37,172 on average, an eye-popping 186 percent increase in the last decade. These kinds of numbers can make financial planning difficult to accomplish.

What is Debt Relief?

Debt relief comes in several forms. Depending on the one you opt for, debt relief could mean a lower payment due to a better interest rate or different payment schedule. It could also mean erasing your debts altogether, or having your debts settled for less that what you owe. The form that’s best for you depends on your circumstances and long- and short-term goals.

Forms of Debt Relief

We’ll discuss top debt relief solutions including credit counseling, debt management programs, consolidation, debt settlement, and bankruptcy.

Credit Counseling

This involves you seeing an accredited financial counselor who will assess your situation then help you with budgeting and provide financial education. While services are typically free, you may be charged a nominal fee. Find out up front which is true for the counseling service in which you’re interested, and make sure the agency is accredited by the Financial Counseling Association of America or the National Foundation for Credit Counseling.

Debt Management Program (DMP)

If your debt issues are acute, your credit counselor may suggest a debt management plan. Here, you pay your debts – usually credit cards – in full, but frequently with fees waived or at a lower interest rate.

You’ll remit one pay monthly to the counseling agency, which allocates it among the companies you owe.

Enrollment does mean that you must shutter existing credit card accounts, however, which can lower your credit scores. After you’ve finished your plan, you can once again apply for credit and start to pursue your financial goals with Achieve.

Debt Consolidation

This strategy has you rolling all your unsecured obligations – with their various due dates and payments – into just one payment, hopefully with a lower interest rate. This makes it easier to stay on top of bill paying.

There are multiple ways to achieve consolidation, including though a zero-percent balance transfer card or a personal or home equity loan. You’ll need good credit to get a balance transfer card, onto which you can shift your higher-interest plastic, then pay the new card off before the promotional period ends and the rate goes up.

You may be able to get a personal bank loan with sub-par credit, but your rate may not make consolidation worthwhile. Home equity loans are easier to get, and usually at an attractive interest rate. The problem here is that you could lose your home if you can’t make payments.

Debt Settlement

This approach means paying an experienced, accredited company such as Freedom Debt Relief to negotiate with your creditors to see if they’d be open to accepting less than what you owe, in a one-time payment in full, to have your debts marked as “settled.” Creditors usually go along because, hey, something is better than nothing, which is what they might get if your file bankruptcy.

Before negotiations begin, you’ll create a savings account from which settlement payments will come. After you’ve saved enough, your account will be used as leverage during negotiations. Note that you make no payment until after each settlement. The process can take between three and five years.

Bankruptcy

You only want to consider this tack if all else fails or your situation is too severe. With Chapter 7, the most popular form of bankruptcy, most of your unsecured debt can be erased. However, such a filing will stay on your credit report for up to a decade, and you may have to turn over assets. If you go with Chapter 13, the court will create a repayment plan for you of up to five years, and the filing will be on your credit report for seven years.

Ultimately, choosing among top debt relief solutions requires an honest assessment of your financial situation. Just don’t take too long since time is of the essence.

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