Debt Relief Options
Have you found yourself in a situation where your credit card debts have piled up, you are struggling to make payments and wondering how you are ever going to get rid of debt or payoff your debts in a shorter period of time, so you can get on with your life and save for the future? If you have been struggling with debt and looking for a way out of debt, you are not alone. In the state of Indiana, as in many other states, many individuals and families are also overwhelmed with credit card debts and are in need of debt relief.
The good news is, there are a variety of debt relief options that you may consider: including debt consolidation (or a debt management plan or DMP), debt settlement, and debt consolidation loans. In general, these debt relief methods have become popular alternatives to bankruptcy, which can have a more damaging and longer lasting impact on personal credit.
See your debt relief options today. Request a free debt relief estimate and savings analysis - at no obligation to you.
How Consolidation Can Help Reduce Debts
As previously mentioned, you certainly have choices when it comes to getting debt relief; one of those choices is a process known as debt consolidation or a debt management plan. When you enroll in a debt management plan, credit counselors review your financial situation and assess your ability to pay your debts.
Once your credit counselor has a thorough understanding of your finances, he or she will normally develop a strategy that can typically help you reduce your debts sooner than if you only continued to make your monthly minimum payments at higher interest rates. Your credit counselor will typically make proposals to each of your creditors, on your behalf, asking for reduced interest rates, elimination of any late fees and penalties, and generally, for more favorable repayment terms. Creditors that agree to the proposals will be placed into the debt management plan. For those who do not agree to the more favorable terms, you are still obligated to live up to terms of your original agreeement.
The goal of debt consolidation is to provide you with a more affordable and more structured payment plan that will allow you to pay off your debts at a pace that you are comfortable with. Credit counseling agencies will work with you to schedule a due date (the date when they automatically debit the account they set up for you) that takes into consideration, for instance, when you get paid or have the funds available in the account. The monies that are debited from your account will then be distributed to each of the creditors who have agreed to be a part of the program. Debt consolidation programs or debt management plans can help consumers get out of debt at an accelerated rate, and offer the advantage of a "debt free day" that consumers can work towards. It is important to note that many people in a debt management or debt consolidation program do not succeed, largely because they do not have the discipline required to stop using credit cards and set aside the required amount of money each month to pay down debts.
See your debt relief options today. Request a free debt analysis and savings quote.
The Debt Settlement Option
Many consumers who are overburdened and barely managing their credit card debt might also consider debt settlement. This is a process where they hope to settle or negotiate with their creditors for significantly less than what they owe. If you are considering debt settlement, a few words of advice: As the term "debt settlement" suggests, credit card companies are certainly not legally required to "settle" or accept your settlement proposal.
In many cases, you will be advised to stop making payments on your credit cards to save up funds over time that you can later use to make a reasonable settlement offer. In these cases, creditors may threaten to sue if you default on the terms of your credit card agreements. In addition, if you default on the terms of your credit card agreement, you will likely see a decline in your credit scores.
However, in spite of the potential risks, debt settlement remains a popular debt relief option or alternative to bankruptcy - which can have a more serious and longer-lasting effect on your personal credit.
Debt Consolidation Loans
For many consumers, applying for a debt consolidation loan is also an option. What this form of debt consolidation involves is combining or consolidating one's high-interest debts into a single, lower interest loan. If you are thinking of applying for a debt consolidation loan, consider the potential risks:
With a debt consolidation loan you will typically combine your high-interest credit card debts into a single, lower-interest personal loan. This loan is generally considered a "secured" loan, or a loan that is tied to some asset or property, such as your home. In many cases, if you default on the terms of your loan, you would have essentially put your home at risk.
In addition, many people who get debt consolidation loans typically accumulate new, high-interest credit card charges all over again. In many cases, they now have new, high-interest charges to deal with on top of their monthly loan payment - which, essentially, is a situation where a debt consolidation loan has made one's debt situation go from bad to worse.
The bottom line is, whatever debt relief option you choose - debt consolidation (a.k.a. debt management plan), debt settlement, or a debt consolidation loan, it is smart to do your due diligence. Make sure that you thoroughly research a potential company's background and ask thorough questions. It is also important that you understand how much money you can potentially save, when you are likely to realize those savings, and the potential impact to your credit score.
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