Debt Management Companies
Getting out of debt isn't easy - if it were, most American households wouldn't be somewhere in the neighborhood of $18,000 in credit card debt. Sometimes it's just not enough to try to balance your budget and start paying off your cards little by little; especially if you have high balances and even higher interest rates!
So what can you do about it? You might want to begin by exploring your debt relief options. Request a free debt relief estimate and savings analysis, at no obligation to you.
There are different types of debt relief organizations available today - debt settlement, debt consolidation loans, and credit counseling companies. Let's take a close look at all three:
Debt settlement, or debt negotiation, companies negotiate on your behalf with your credit card companies, once you find you can no longer pay your monthly minimums, and interest hike and late fees are piling up. This increasingly popular form of debt relief settles or "forgives" your debt once and for all - so whereas with debt management you ultimately pay back what you owe, with debt settlement, you, or a settlement company on your behalf, make an offer to settle to a credit card company. If that offer is accepted and paid in one lump some to the credit card company, your debt is settled or forgiven.
You don't necessarily need an outside agency to handle debt settlement for you. For example - let's say that you owe $12,000 of debt to a credit card company. Over the years, you may have ended up paying three times this amount in interest and late fees. At this point, you can call up the credit card company and offer them a lump sum now for $5,000 - and if the credit card company agrees, that's consumer-driven debt settlement.
But if you prefer not to deal with the credit card companies directly, you can have an agency settle your debt on your behalf. Keep in mind that while new laws prohibit these agencies from charging anything upfront, you may have to pay "performance-based" settlement fees based on the success of the agency representing you. Furthermore, if you choose to have legal representation handle your debt settlement, be aware that lawyers can legally charge fees upfront.
See how debt relief can help you. Answer a few, simple questions to get a free debt relief estimate and savings analysis - at no cost to you.
Financial institutions offer you the ability to take out loans that you can use to consolidate all your credit card debts under. The advantages to these loans is that they generally come with a much lower interest rate than the credit cards themselves, allowing you pay off a smaller monthly minimum. In addition, they offer you the convenience of just having to make one payment per month, instead of payments on multiple cards.
There are two types of consolidation loans available - unsecured and secured. Unsecured loans are smaller (generally under $10,000) and don't require you to put up any collateral. For this reason, they are relatively low-risk, though you still need to make monthly payments on them or risk further damage to your credit.
Secured loans, on the other hand, are for credit card balances that usually exceed $10,000, and do require you to tie a substantial piece of collateral - such as your house - to the loan. Failure to make steady payments on the loan can result in you losing your house - so make sure you can handle this kind of loan before deciding it's the right choice for you.
Credit counseling companies offer tools and other types of assistance that help you to pay down your debts on terms that are more favorable than currently exist. Credit counselors are experts in getting your credit card companies to lower interest rates and waive fees and penalties. They can help you decide whether your debt is manageable on your own, guide you through consolidation, or in some cases, take you through the process of bankruptcy. Each option comes with its own set of pros and cons, and an experienced counselor will be able to help you understand them and lead you to make the best decision for you and your finances.
The bottom line
As with any major decision, choosing the right company to work with involves doing research. But if you're diligent, intelligent and ask the right questions, you'll can be on your way to a debt-free life!
Request a free debt relief analysis and savings estimate in minutes. Start by answering a few, simple questions here.