Debt Relief Options – What is the Best Way to Get Out of Debt?
When you are struggling with debt, you need to be able to make a plan that will help you get out of it. This can be done through debt consolidation, debt settlement or bankruptcy. It is important to understand the different options so that you can decide which will be best for your situation.
Debt consolidation involves combining all your credit card and loan payments into one monthly payment that is repaid to the company that handles your debts. This can help you keep track of your finances better and may even lower your interest rate.
However, debt consolidation can also cause your credit score to take a hit and make it harder for you to get new loans in the future. This is because lenders consider debt consolidation a sign that you’re not making enough money to pay back your debts.
Another way to reduce your debt is to refinance your mortgage or auto loan, which can lower your interest rate and save you money on interest payments. This is a great option for people who have a lot of credit card debt or high-interest loans, such as student loans.
Some debt relief companies offer tax debt relief and can negotiate with your tax agency on your behalf to have taxes forgiven or reduced. These companies have tax attorneys and CPAs at hand to help you with your filing and payments.
The most reputable debt settlement companies have full accreditation from the Better Business Bureau, American Fair Credit Council or other agencies. These organizations evaluate debt settlement companies based on a number of factors, including customer satisfaction, services and performance.
In addition, many reputable debt settlement companies have thousands of five-star reviews on their websites. They are backed by experienced and well-trained attorneys who will work with your creditors to settle your debts for less than you owe.
When you enroll with a debt settlement company, they will start by asking you to set aside a certain amount of money each month into a savings account that is earmarked for debt negotiation. Once the savings account is large enough, the company will begin negotiations with your creditors on your behalf.
Most reputable debt settlement companies will negotiate with your creditors and attempt to get them to agree to lower your debts in exchange for a lump sum of money. The negotiated amount is then placed in an escrow account until it is used to eliminate your debts entirely.
This process can take weeks or months, but it will result in substantial debt relief that will leave you debt-free. Most providers charge a fee of between 15% and 25% of the total enrolled debt.
A reputable debt settlement provider will work with your creditors to settle your debts and remove them from your credit report. They will negotiate on your behalf with your creditors, collection agencies and attorneys to secure the best possible settlement.
Debt relief will often help you avoid filing for bankruptcy. Filing for bankruptcy can be extremely stressful and can have long-term negative effects on your credit rating, including a blemish on your credit report. The negative information can remain on your credit report for 10 years or more.
