For many consumers, debt is a heavy burden weighing down their ability to work toward a healthy financial future. Those trying to get out of debt may find themselves wondering how to find a good debt relief program. Luckily, there are several options available.
What is a Debt Relief Program?
The best debt relief programs are programs designed to help individual consumers find their way out of cumbersome debt. Often, and especially with credit card debt, consumers can find themselves facing ever-increasing bills with no end in sight. There are several types of debt relief programs out there, and some may fit your situation better than others. So what are the best debt relief programs available for your situation?
Debt Consolidation
For consumers with a lot of unsecured debt, like credit cards, medical debt, or payday loans, debt consolidation could be a perfect choice. The idea behind debt consolidation is fairly simple.
An individual can take out a single loan that allows them to quickly pay off high-interest debts that can often spiral out of control, and enters into an agreement with their new creditor to pay the full amount at a lower interest rate, and over a longer duration.
This can give the borrower room to breathe, and allow them to dig their way out of debt without constant stress and worry. While entering into a debt consolidation can temporarily lower your credit score, for those that make their payments on time and in full, it can result in a better score down the line.
Debt Settlement
Another one of the best debt relief programs is known as debt settlement. Debt settlement takes a different approach, with the goal being to settle outstanding debt for a lesser amount than what’s actually owed. For consumers utilizing this method, the process is fairly straightforward, albeit lengthy. After choosing the debt settlement company that works for you, you’ll be instructed to stop payments on outstanding debts, and instead, direct that money towards a secured account.
Over time, the account will grow, and after a few years, the amount will be sufficient to enter into negotiations with your creditors. Depending on how successful the negotiations are, you could end up paying significantly less than what you actually owed. While this method can provide many benefits, there are also some downsides that should be considered.
The process itself can be fairly time-consuming, and there’s always a risk of your creditor refusing to negotiate. There’s also the potential for a negative impact on your credit score during the duration you cease payment on your outstanding debts.
Credit Counseling Services
Credit counseling is another option for those who need assistance in getting out of debt. It involves working with a trained credit counselor to get ahead of your debt by increasing your overall financial literacy.
Credit counseling services can help provide you with access to information regarding a variety of important strategies, like creating a realistic budget, understanding the types of debt you have, and prioritizing your payments. If you’ve chosen a reputable counseling service, they may even be able to assist in negotiating a lower interest rate and more preferable terms for fees that your creditor would otherwise charge you.
For anyone going this route, it’s important to do your research on the credit counseling organization you’re dealing with. Some are more affordable than others, so make sure to check in with your local consumer protection board to get information on both their reputation and the potential fees they may charge.
The Main Takeaway
With several options available for dealing with consumer debt, it’s not impossible. And while it can be stressful, if you were wondering how to find a good debt relief program, hopefully, you now have a better understanding of the process.
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