5 debt relief options to fix your finances sooner rather than never
If you’re in over your head in credit card or other types of unsecured debt, you’re not alone. Many Americans are burdened with thousands, sometimes tens of thousands of dollars worth of debt. In fact, the average American household has accumulated over $16,000 in credit card balances. You might think ignorance is bliss, but ignoring your debts in hope of better financial circumstances is your worst option. Instead, let’s talk about the 5 fundamental debt relief options that can help you mend your financial accounts.
Continue making the minimum monthly payments
It’s good that you’re not ignoring your debts, but if you’re just paying the monthly minimum on your credit cards, your debt will follow you to the grave. Because of steep interest rates on most credit cards, the interest you owe can soon outpace the principal.
Credit counseling or debt management
When you seek credit counseling, a type of debt management program, you make one monthly payment to a credit counseling agency. The perks include turning multiple, difficult-to-track payments into a single convenient payment and, ideally, one lower interest rate so you can pay your debt faster. While the program generally takes about 3 to 5 years to complete, most people do not successfully finish paying off their debts via this option. Not to mention the fact that you still end up paying 100 percent of the debt plus interest.
Debt consolidation means you’re basically combining your debt by taking out a single, low-interest loan used to pay multiple creditors. This option may help you lower your monthly payment; however, some consolidation loans require you to put up collateral, such as your home or car. That means if you can no longer make your monthly payments, the creditor can take your possessions. Note: debt consolidation is not to be confused with debt settlement.
When you file for Chapter 7 bankruptcy, the collection process comes to a halt, meaning no more letters and phone calls, and certain types of debt are forgiven. Bankruptcy does not discharge all debts, however, only most unsecured debts, such as medical bills, utility bills, and credit card debt. Secured debts including child support, alimony, some tax debts, and student loans will not be forgiven.
Debt settlement or debt negotiation
Unlike credit counseling and debt consolidation, debt settlement may reduce your interest rate and the original principal owed. How? Good old-fashioned haggling. Debt settlement professionals will negotiate with creditors on your behalf to reach an agreement to lower your debts. Even with fees, the amount you pay is far less than what you would have originally paid. While most programs typically take 3 to 4 years to complete, a good program, like the one at New Era Debt Solutions, can take as little as two years.
Finding the right debt repayment option depends entirely on your unique circumstances. No two situations are alike. If you’d like to find out if you’re a good candidate for debt negotiation, call New Era Debt Solutions at 1-800-527-4421 today! Our team of debt specialists have helped our clients realize an average savings of over 56 percent before fees.