If you find yourself in an unmanageable situation in regards to debt, sometimes the best strategy is to engage a professional to help ease the burden that you’re experiencing. A debt relief program is designed to help qualified individuals experiencing financial hardship pay off their debts in significantly less time than they would be able to by just making the required minimum monthly payments to creditors.
Benefits of a Debt Relief Program
When you enroll in a debt relief program, professional negotiators contact creditors and collection companies on your behalf to help resolve your debt balances. These certified professionals work to secure resolution of the full account balance(s) in exchange for a partial payment. Resolving a heavy debt load on your own can be overwhelming, especially if you’re unfamiliar on how to deal with creditors, attorneys, and collections companies. Enrolling in a debt relief program helps take the guesswork and stress out of settling your debts.
Working with a licensed debt settlement company ensures that you won’t have to navigate the confusing and often legally treacherous waters of debt collections and summons on your own. Additionally, you’ll enjoy a handful of other benefits as well.
Seven Advantages of a Debt Relief Program
Let’s face it. If you’re in a situation where your debts have become unmanageable, the most overwhelming aspect is probably the cost of getting out from under them. A debt settlement program will immediately help stabilize your financial situation by negotiating for significantly reduced amounts. When your debts are reduced by a considerable portion, it can be much more manageable to get out of debt and stay out of debt. You will be saving not only money on principle but also potentially months, or even years of accumulated fees and interest charges that would have added up had you not taken the step to enlist professional help.
Negotiators contact your creditors or collection agencies to settle your debts in full with lump sum payments for a fraction of the original balance. While not every single debt can be settled, often a debt settlement company’s expertise can save you money because the creditors may not have agreed to negotiate if you had contacted them directly on your own.
Reducing Payment Terms
Instead of making what seems like endless payments straight to interest, debt settlement allows you to repay your debts in a shorter time. Ultimately, you’re paying less and shortening the overall payment term when the negotiators are able to settle with the creditor for a reduced amount.
Most debt relief programs give you the opportunity to resolve your debts within two to four years as long as you are committed. It is very likely that you would spend much longer, sometimes in excess of ten years, when trying to pay off the debts on your own. The power of compounding interest can be quite costly and often will end up causing you to pay significantly more than the original balance.
Peace of Mind
Often the psychological and mental burden of feeling buried under a mountain of debt can lead to significant issues with stress or even manifest itself in other physically detrimental ways. The relief that comes from handling unmanageable debt - with the goal of becoming debt free - is extremely reassuring. If you’re able to accomplish this for less than the total amount in a much shorter time frame, suddenly you feel more encouraged and hopeful. There is much to be said as well for having a trained professional working on your behalf and who is there to consult and answer questions as you go through the process. The ultimate goal is to find a program that will suit your unique financial needs and circumstances and lead you to a better place, both financially and mentally.
Any debt settlement program should help reduce stress, not compound it. Once you’ve completed the process and each settlement has been completed, you should be left feeling like a huge burden has been lifted from your shoulders.
While typically considered a last resort, many consumers, when faced with an overwhelming debt load, find themselves turning to bankruptcy just to find a way out. If unable to catch up on late or missed payments, debt settlement is a favorable alternative to bankruptcy. Depending on the type, bankruptcy will not eliminate all debts. Additionally, although you keep your exempt property when filing a Chapter 7 bankruptcy, you do lose non-exempt property and depending on your particular circumstances, which can include your home, cars, cash, stocks, and bonds. Filing for bankruptcy also leaves a derogatory mark on your credit for ten years. It can be very difficult to secure future loans and even if you’re able to secure a loan or credit card, chances are you’ll be paying a significantly higher interest rate to obtain it. Lastly, bankruptcy is not an inexpensive process. Attorney’s fees, filing fees, bankruptcy trustees fees, as well as credit counseling costs all make bankruptcy an expensive proposition.
While debt settlement can impact your credit score temporarily, the hit is considerably less than if you were to file bankruptcy. Through a debt settlement program, you are settling your qualified debts for a reduced amount. The creditors will report the balance owed as resolved with debt settlement, and that will eventually drop off of your credit report altogether. Bankruptcy will show that you have not paid the creditors and your credit can be impacted for up to seven to ten years and remains a part of your permanent public record.
Protection from Creditors
If you’ve started receiving calls from creditors or collections companies, it can become quite burdensome, not to mention outright stressful, to continue dealing with these people. When you hire a debt relief company, you no longer have any obligation to continue communicating with them. Professional negotiators take the reigns in this regard and you’re relieved from the daily stress of incessant calls and threats. When you are represented by a debt relief company, your rights are protected and the creditors do not engage in continued harassment. If creditors attempt to contact you repeatedly or engage in abusive behavior, you are entitled to sue under the Fair Debt Collections Practice Act.
Freedom from Debt
The most fulfilling part of debt settlement is the end result: freedom from debt. While it may not be possible in all situations to eliminate 100% of your debt, the goal is to pay off as much as possible. When you’ve been overwhelmed with debt for months or even years, there is no better feeling than finally feeling free from that struggle.
Once you’ve reduced your debt to manageable levels or even better, achieved the goal of becoming debt-free, you should take the necessary steps to stay out of debt and start rebuilding your credit. Don’t borrow more than you can pay back in one month and keep your credit utilization to a minimum. Make sure your monthly obligations are covered and work to increase your savings and over time, watch your financial future unfold for the better.
Improved Long Term Outlook
Once you’ve completed a debt settlement program, you can begin to focus on growing your finances. With low or no debt, your credit rating will begin to improve and with more money freed up for increased savings, you can begin to create an abundant financial future for yourself. Determine what you value and set some short and long term goals for yourself and family. Do you want to buy a house, save for a child’s college expenses, or diversify your investments? All of these and more are possible once you’ve overcome the burden of debt.