You’ve got a boatload of unsecured debt that you want gone. You’ve decided on debt relief but are unsure which company to choose or which form of relief would work best. After all, there’s debt settlement, debt consolidation and more. Well, here’s what to look for in a debt relief company, plus answers to any questions about debt relief.
What is Debt Relief?
It’s basically a measure that either renders your debt load more manageable through renegotiation or supplants your debt with a new loan with different terms. Those new terms could include a reduced interest rate or balance, or an extended loan term.
What Kinds of Debt Relief Are There?
You do have options, but whichever one you choose you’ll need to see it all the way through. Here’s a thumbnail sketch of the forms of debt relief:
- Debt consolidation. This strategy entails rolling high-interest debt – typically from credit cards – into a new, single loan with a lower interest rate. Not only does it save you money and allow you to pay off your debt faster, but it makes bill-paying simpler since you have just one bill to deal with. You can also use a balance transfer card to consolidate your debt. For an introductory or promotional period, you can shift your high-interest debt onto one and save money. The rub is that you need good credit to get one of these cards. You’ll also need to be certain you repay the new loan before the introductory period expires and the interest rate shoots up.
- Debt settlement. With this approach, you’ll pay a debt relief company like Freedom Debt Relief to negotiate with your creditors to “settle” your debts for less than the amount owed. Creditors usually go along because they know they get nothing should you file bankruptcy, which is what you’ll do if they don’t work with you. How debt settlement works is, you deposit funds monthly into an escrow-like account and when you’ve saved enough, the company will go to bat on your behalf. Settlement funds will be drawn from your account.
- Debt management. A debt management approach rolls multiple payments into one, can pare your interest rates, and provide a plan to eliminate your debt in three to five years. Such plans are typically offered by nonprofit counseling agencies. Note, though, that you’ll usually have to live without your plastic while you’re in the program, and you’ll want to make sure your spending is under control since you’ll have years of payments, and if you miss one, you’re out.
- Bankruptcy. While it can give you a fresh start, and takes only around six months to complete, bankruptcy is your last resort and you do want to avoid it if possible. For one thing, the filing stays on your report for seven to 10 years, depending on whether you file Chapter 7 or 13. You also may have to relinquish assets. It’s better to find another relief option, such as debt settlement, that can get you out of debt within five years without loss of property and with less credit damage.
How to Know You’re Getting a Good Company
First off, you must pick the financial strategy that’s best for you. Once you’ve done that, there are some things to do or look for including:
- Accreditation. You want to make sure the agency is certified by trade and accrediting organizations.
- Go online for customer testimonials and check with your local consumer protection agency for complaints.
- Find out how long the agency has been in business. Experience matters.
- Make sure the company doesn’t charge you up front. If it does, it’s likely a scam company.
- Avoid companies that pressure you or make “guarantees” about eliminating your debt before they even understand your situation.
Now you know about the various forms of debt relief and what to look for in a debt relief company. So, you have no excuse now, right?
Get going on your new life today.
