Additionally, these programs often encourage or direct their customers to stop making monthly payments to their creditors. These programs often require you to deposit money into a special savings account for 36 months or more before all of your debts are settled. If you wait until your debts are sent to collection, you may find it harder to negotiate a new payment plan. Debt relief programs typically focus on debts that are not backed by collateral, also known as unsecured debt.
What does it take to qualify for debt relief?
Debt consolidation loans can also have lower interest rates than your original debt, meaning you save money for the total amount of interest paid over the hours. Which creditors are being paid and how much; if your debts are in debt collection, make sure you know who owns the debt so that payments go to the right agency. Debt consolidation loans may also have shorter repayment periods, so you may pay more money overall.
How does debt relief help?
If you have an excellent credit score, you may be able to get a debt consolidation loan with a low, fixed interest rate that will cost you less in the long run than you currently pay with variable rate credit cards, which may currently have a higher interest rate. Taking steps to understand your financial situation can help you decide whether you need professional debt relief or whether you can work your way out of debt through more careful budgeting and good money management skills. Debt settlement is a debt relief option that involves working with your creditors to create a debt reduction plan
References:
Barry Ritholtz is a renowned finance expert, author and blogger. With over 30 years of experience in the financial industry he has gained a reputation as a thought leader and influencer in the investment community.