Living free from debt is everybody’s aspiration and desire. Unfortunately, debt, in whatever kind, size, and degree, has affected huge numbers of people, businesses, and organizations around the globe. Several have overcome it, although some have collapsed underneath the weight of it.
I used to be unemployed with a large amount of consumer debt so I know firsthand that personal debt can cause a great deal of stress and emotional turmoil. The very first thing you should do if you find yourself in this situation is to stop, think, and determine the best solution to your financial situation. Understanding
why you should consider using a debt relief program may provide you with valuable insights during this critical decision-making process.
If you need debt relief help, it is advisable to check out numerous debt relief companies and select one that is proven to provide assistance with debt. A great way to achieve this is by looking at
debt reviews online and by calling several companies and asking important questions. Discover how
debt relief is made easy with Pacific Debt Relief to simplify your journey toward financial stability.
Types of Debt Needing Relief
Credit card debt
This includes balances on regular credit cards, retail cards, and department store cards. High-interest rates above 20% can cause balances to quickly spiral out of control. Fees like late fees or over-limit fees also add up.
Medical debt
Even insured patients can be stuck with thousands in medical bills after accidents, hospital stays, or serious illnesses. Providers may aggressively push for payment even when patients can't afford it.
Payday loans
These small, short-term loans targeting those with poor credit often have interest rates above 500% APR. Rollover loans and fees can trap borrowers in an unending cycle of new debt.
Personal loans
Unsecured loans from banks, credit unions, or online lenders also accumulate interest rapidly. A $10,000 loan at 15% interest can end up costing over $15,000 to repay over 3 years.
Auto loans
Loans for vehicles may have high monthly payments exceeding $500 that become unaffordable if income drops. You may owe more than the car is worth.
Mortgages
Loans for home purchases, especially adjustable-rate mortgages, can become difficult to afford if your financial situation changes. Uncover
the little-known secrets of debt relief to navigate through such financial intricacies more effectively.
Debt Relief Options
Debt management plans
Nonprofit credit counseling agencies work with creditors to reduce interest rates to around 5-8% and establish more affordable payment terms, often with reduced or waived fees. Plans typically take 3-5 years to complete. Learn more by exploring some critical
debt relief facts that you should know.
Debt consolidation loans
These loans allow you to roll multiple debts into one through a personal loan or balance transfer credit card. This combines payments and ideally lowers the interest owed. Loans run 3-7 years with fixed interest rates around 6-13% typically.
Credit counseling
Certified credit counselors can review your full financial situation and provide budgeting assistance, advice on prioritizing debts, and help to craft a concrete debt repayment plan you can start immediately.
Debt settlement
For those with over $10k in debt and poor credit, debt settlement companies negotiate with creditors to settle debts for a portion of what is owed, typically 40-60%. This has a severe negative impact on credit. Fees also apply.
Bankruptcy
As a legal proceeding, bankruptcy provides court protection from collection efforts and can eliminate certain debts entirely. However, it damages credit scores for up to 10 years. Chapters 7 and 13 have different costs and procedures.
Costs of Debt Relief
- Debt management plans have enrollment fees from $0 to $75 and monthly fees of around $25-$40. There is also the cost of staying in plans for several years paying interest, even if reduced.
- Debt consolidation loans have origination fees, prepayment penalties, and closing costs. Interest owed over 3-7 years is a major cost consideration as well.
- Credit counseling from reputable nonprofits is often free or very low cost. For-profit companies charge session fees.
- Debt settlement companies charge 15-25% of enrolled debt amount plus monthly account fees. There may also be taxes on settled debt.
- Bankruptcy lawyer and court filing fees are $1500+ for Chapter 7 and $3000+ for Chapter 13. Debtor education courses are also required.
Certain criteria for debt relief help – the way to select the most effective debt relief company:
- Longstanding company with many years in business
- Member of the Better Business Bureau with a good rating
- Belongs to professional associations like NFCC or AFCC
- Responsive customer service and the ability to speak with an agent anytime
- Clear refund policy if not satisfied
- Handles different types of unsecured debt beyond just credit cards
- Realistic timeline expectations are provided upfront
Questions to Consider:
- How long has the company been in business?
- Is the company a member of the Better Business Bureau?
- Are they members of a professional trade association?
- Is there a safe and secure website?
- Can they provide client testimonials?
- Is the enrollment consultant knowledgeable and able to answer your questions?
- Is their program versatile depending on exactly what you have available from month to month?
- Is it possible to speak with your debt negotiator anytime?
- Can they help with consumer debt as well as small business debt?
- What ramifications will the program have on your credit rating?
Watch Out for Debt Relief Scams
Be very wary of debt relief companies that seem predatory or dishonest.
Warning signs to avoid include:
- Upfront fees before settling any debts
- Claims they can make debt magically disappear
- Asking for sensitive info like bank account logins
- Refusing to provide detailed contract terms
- Constant high-pressure tactics to enroll right away
Vet any debt relief company thoroughly with the Better Business Bureau, state Attorney General, and online reviews before providing personal information. Never pay a company that avoids answering questions or explains processes shadily.
Alternatives to Debt Relief
Other options beyond formal debt relief programs include:
- Budget overhaul and cutting unnecessary expenses
- Debt snowball method of paying minimums on all debts except the smallest
- Debt avalanche method of paying minimums on all but the highest interest rate debt
- Calling creditors directly to request lower rates or altered payment plans
- Taking cash-out mortgage refinance or home equity loan/line of credit
These strategies may provide debt relief through consumer-driven actions rather than utilizing a third-party program or service. Financial counseling can help identify the most suitable options.
FAQs
Conclusion
Escaping the grasp of debt is possible with the right combination of debt relief strategy, lifestyle changes, and determination. Ensure you thoroughly research any relief company or service before enrolling and understand all costs and credit implications involved.
Relief comes easier when you gain control and get personalized guidance. There are many ethical and affordable options to restore your financial freedom. The majority of debt relief help companies can offer a number of options for your debt situation. An impartial review of these firms can help in finding the right debt relief firm but calling and speaking with the company and getting direct answers may be just as useful.
If you are struggling with overwhelming debt and want to explore your debt relief options, Pacific Debt Relief offers a
free consultation to assess your financial situation. Our debt specialists can provide objective guidance relevant information and support to help find the right debt relief solution.
Do Not Sell My Personal Information