Debt settlement is just one of the debt relief options you have when you want to dispense with the burden of debt.
In fact many of our clients have been to other debt relief programs before coming to us and finally finding freedom from debt and getting peace of mind they deserve.
Let us get to know two of these options below.
Debt Consolidation as an Effective Debt Relief Option
Sometimes called consolidation loan, a debt consolidation means taking one loan to pay off all your existing debts. The benefit is that it simplifies payment by combining all your debts into one monthly payment program. With your new loan, you’ll pay off all your debts and now deal with just one debt.
Note, however, that you have no assurance that you will qualify for a loan large enough to cover all your individual accounts. Likewise, debt consolidation should be done only when you can get lower interest rates and/or waived penalty fees.
Debt consolidation is an effective debt relief option for the debt-ridden. But like other options, it requires that you commit and stay current with your new loan. It should not be considered a quick fix to your debt problem, i.e., you just want to get over it fast and start the spending spree again once all your debts are settled.
Credit counseling is probably the most common form of debt relief. In credit counseling, a credit counselor evaluates a debtor’s financial status and recommends a Debt Management Plan (DMP) if found workable under his circumstances.
On the debtor’s behalf, the credit counseling service negotiates with his creditors the proposed debt management plan which should consist of a lowered interest rate. The debtor then pays his creditors through the credit counseling agency based on the approved plan.
It should be noted, however, that in credit counseling, you still pay 100% of your total debt owed but with a lower interest. It takes 5-7 years and has low success rates.
Top Tip from Federal Trade Commission: Be aware that a “non-profit” status of a credit counseling agency is no guarantee for free, affordable or even legitimate service. Research carefully as this could spell the difference between getting out of debt and worsening your debt woes.
Debt settlement is considered by many to be the cheapest and fastest way to achieve freedom from debt. Debt settlement is a form of debt relief that can potentially make deep cuts in your principal balance, typically 40%-60% average in our previous experience*.
Debt settlement plans are quite flexible depending on your needs, as assessed by certified debt consultants.
In debt settlement, your debts are negotiated for less than what you owe by a debt settlement company. You make payments to a separate trust account, held under your name, which you can withdraw anytime upon request. Debt negotiators then carefully negotiate with creditors and pay the negotiated amount using the funds you have accumulated in your account.
Like credit counseling, debt settlement simplifies payment by offering one monthly payment scheme at lower rates. The main advantage is that it can significantly reduce your debt and the number of years you’ll be paying it, unlike credit counseling where you still pay the full amount and takes a much longer time to complete.
Debt settlement, credit counseling and debt consolidation are among your options in dealing with your financial hardship. All these, however, can only help you to a certain extent.
If your debt problem is a result of an extravagant lifestyle that you cannot actually afford, then all these options cannot eliminate the problem from its roots.
The Real Solution is YOU
What you need is to accept things and to learn to take responsibility for your own actions. Stand in your financial truth. Arm yourself with financial knowledge so you will know how to get out of the debt trap.
*Financial Rescue LLC offers no guarantee to actual negotiated amounts.