Debt relief is in the news in this period of high unemployment and economic recession, as many people find that they need help with overwhelming debt . The process is complicated, and extreme care should be taken to evaluate options offered by individuals or organizations. If you find you need help with finances, you can seek help from your creditors, private financial counselors, Christian counseling organizations, and for profit and non-profit companies. Business owners, may be eligible for government programs that can help.
If you are not able to make the agreed monthly payments with interest, you will want to find alternatives to bankruptcy. This is an extreme step, with a tremendous and long lasting negative impact on your credit rating, and hopefully it will never prove necessary.
It will be a good idea to ask for help from your credit card company or other lenders before trying a debt reduction company. Creditors will sometimes reduce or defer interest and late payments if a request is made with good intentions to repay the principal amount.
If you are in business for yourself, check government programs that are available for small business owners, offered under the stimulus program. You may qualify, and you do not have to repay grant money.
Credit counseling is a great first step in getting control of finances. There are many programs that offer guidelines for financial management. Most of these start with making and keeping to a budget. A budget is a plan to balance income and expenses, with goals and time frames for paying off debt and increasing savings. Counseling plans are progressive: create a budget, build a three-month cushion for emergency cash, and then start paying off debts. Make the minimum payment on all debts but the smallest, which will be paid off as rapidly as possible. Then the next smallest debt is attacked.
If you can stick with the disciplined approach suggested by debt counseling, you can make progress and get the satisfaction of learning to live on cash rather than credit. Most people waste money on unnecessary things without even realizing it until they begin to track their spending, and actually find that they can afford to pay their debts by living on a budget.
Debt consolidation is simply taking out a personal loan to pay off multiple smaller loans. The advantages of this are many, although the debt is still owed in full. However, interest rates on personal loans can be significantly lower than on credit card loans, and the repayment period can be extended to lower monthly payments. This is especially true if the loan is a home equity loan, secured by a lien on your house.
In addition, having one payment to make a month is easier to manage than having many small payments. If you are late with a payment, there will be only one late charge rather than several, and only one bad mark on your credit. This program works well if you are serious about keeping out of further debt, but can complicate things if you just fill up your credit cards again.
If you are really in deep unsecured debt, such as credit card charges, you may be a candidate for debt reduction. This is a process whereby negotiation with your creditors results in lower interest rates, the dropping of late charges, and perhaps a reduction in the amount of principal you will have to repay. Whether the debts are a result of high medical bills, loss of a job, too many student loans, or simply wasteful spending habits, you are still in a position where you need relief.
If you are falling farther behind each month, making no progress on eliminating your debt, and even piling up late charges that increase your interest rates, you may need to consult a debt reduction company. Proceed with caution, ignoring the siren calls of ten minute free consultations, short periods of time to freedom from debt, and other sales pitches you will see online and hear on the radio. Be very careful before you choose a company to help you reduce the amount of your debt.
If you do contact a debt reduction company, don’t be wooed by promises to – save you money – without a credit check – relieve you of a large percentage of your debt – be get you debt free in 2 years. Approach any interview cautiously, and ask questions. Make sure you understand the impact on your credit (bad), and the tax consequences (the amount you don’t have to pay may be considered income). Know up front the fees that you will pay, the process by which your money will get to the creditor, the guarantee of satisfactory performance on the company’s part, and the end result. Make sure the company is affiliated with national organizations that have high standards, and has a good standing with the Better Business Bureau.
Whether the debt relief you achieve is done by a patient focus on paying the bill, or by a process of negotiation with your creditors, it is possible that one day soon you can be debt free.
Are you stressed over bills and tired of being in debt? Well, let us help you climb out of debt relief and make a debt settlement now. Stress isn’t a good thing to have all the time and we can help make it happen.
