Living with debt can be very stressful, not only to you but also to your bank account. Luckily, you don’t have to suffer. There are services out there that can help you manage and consolidate your debt. Once you know your credit score and have a comprehensive overview of your debt, you’re ready to start tackling goals. While becoming debt free is probably your main goal, it’s best to start smaller, based on your situation. That’s where the expertise of a debt relief expert comes in handy!
Debt relief is a solution for individuals that want to manage multiple types of debt with a single monthly payment. A debt relief company will negotiate all your debts to help you get better monthly payments and interest rates. They may even be able to negotiate down some of your current debts. Then, you’ll pay your debt relief company one monthly payment to go toward all your debts. Debt relief providers will typically charge a fee for services, so be prepared to spend just a little bit of money for that expert advice and actionable steps to improve your situation!
If you have overwhelming debt that cannot be settled, bankruptcy is also an option. After taking the means test to determine whether you qualify, bankruptcy could allow you to hit the reset button on your debt, but it comes at a cost to your credit score.
That’s where debt settlement companies come in. The longer you go without making a payment, the more likely your creditor is willing to forgive the debt. So if you don’t see bankruptcy as an option but you want to settle some of your debts, hiring a debt relief company can make sense.
Debt relief companies will manage your relationship with your creditors in order to negotiate your debt and reduce the amount of money you owe. Essentially, you agree to stop paying your creditors and instead, deposit money into an escrow account managed by the debt relief company each month.
As you continue to miss payments, your creditors will continue to lose money and may be willing to settle for less than what you owe. But not all creditors will work with debt settlement companies, the FTC and the CFPB warn. Missing payments will also have a negative impact on your credit score.
Debt relief companies cannot help with debts that are secured with collateral, such as auto loans or home mortgages. They also cannot help with federal student loans or state and federal taxes.