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debt help

Debt Help: How To Know When It’s For You

By: Michael Millington


Looking for and finding debt help can be as simple as doing an online search. Many companies and services exist that can provide you with the help you need. While plenty of options exist, it can be hard to know what form of debt help you should go with. Determining what kind of debt relief you need can be based on multiple factors. Your credit rating, available income and monthly financial ability (among other things) all affect what level of debt help would suit you best. Here we will list the forms of debt relief available and who they would help the most.

Professional Forms of Debt Help

Debt Settlement

Settling your debts (either on your own or professionally) can yield certain benefits and detriments. The benefits come in the form of how debt settlement works. In order to help eliminate your debt, you can settle your obligation for less than what you owe. This can be a varying percentage depending on what you’re able to negotiate for. Professionals might stand a better chance at being able to negotiate for better settlements than individuals, but both can initiate the process. The negative about debt settlement is the fact that you must pay a lump sum to settle a debt, and this is even if your credit provider accepts the settlement. Credit providers are not obligated to help you settle your debts. Keep this in mind as professionals might have a higher chance at convincing lenders to settle debts.

Debt Consolidation

Debt consolidation allows for the payment of multiple debts through one consolidation loan. This is one of the more desired forms of debt help, but it can be difficult to achieve. A consolidation loan is like any other loan you can apply for. As such, you will need to have adequate credit in order to qualify. If you don’t have the proper credit, you might not be able to get a loan with good rates or a loan with enough money. In some situations, you might get rejected altogether. There are some ways to know if you can qualify for a consolidation loan. You can look to loan gathering services (like Lending Tree) who will see if you prequalify based on your information. If you have adequate credit and can make monthly payments on your debt, a consolidation loan might be the best option for you.

Credit Counseling

The process of credit counseling doesn’t actively rid you of debt. However, credit counseling does provide you with the knowledge you need to get yourself out of debt. If you don’t know what you should do about your debt but you don’t want to pay someone for help, credit counseling is a perfect alternative. There are many counselors that offer their services for free. Your counselor will assess your debts and tell you the best way to deal with each. Should you have a particularly difficult debt then your credit counselor can suggest a debt management plan. This plan can help you save money on your debts by potentially eliminating interest and late fees from what you owe. The main problem with credit counseling is that there is no authority to make sure your habits change. While the process is free, you face no penalty for not adhering to it. A large amount of discipline is necessary for credit counseling to work.

Bankruptcy

Often referred to as a last resort in the world of debt help, bankruptcy can offer the biggest benefit. Filing for bankruptcy can result in your unsecured debts being discharged completely, eliminating your need to pay them off. The only financial obligation you might have is to your legal team for filing. Should you file for bankruptcy, you can see your debt disappear in as little as three months. However, bankruptcy has the biggest detriment as well. A bankruptcy filing stays on your credit report for up to ten years. This can prevent you from qualifying for credit related products, like loans and credit cards. This can also stop you from getting certain jobs or even getting an apartment or house. If you are overwhelmed by debt and your creditors threaten to bring collection actions against you, bankruptcy can help. Do your research into bankruptcy before you take the plunge.

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