There are many individuals who believe that they cannot receive help with their debts. While there are some debts that must be paid back in typical fashion, many debts can be resolved through some sort of debt help. There are multiple ways to receive assistance with your financial obligations that you should know about. Whether you need to organize your debts or get rid of them altogether, there’s a method of debt help for you.
Ways to Receive Debt Help
Debt Settlement is the method many people seek out to help lower the total amount of debt they have to pay back. In a debt settlement program, monthly payments are made into an account on behalf of your chosen debt settlement company. The debt settlement company negotiates your settlement with your credit provider and then uses the funds you’ve saved to make the payment, effectively eliminating your obligation. Although a settlement can be reached without the use of a debt settlement company, note that credit providers are not obligated to settle debts at all. Despite this fact, many credit providers may settle as they don’t want to risk receiving nothing for your debt (as can be the outcome through bankruptcy).
Commonly referred to as a last resort, bankruptcy has a profound effect on both your debt and your credit score. Successfully filing for bankruptcy can be beneficial for your finances as it will eradicate most unsecured debts you may have. While this will get rid of your debts quickly, it will also have a devastating effect on your credit report. Aside from substantially lowering your credit, a bankruptcy can stay on your record for up to ten years and prevent you from applying for other forms of credit. In some cases, bankruptcy can even hinder your ability to get a job. Last resort for debt help, indeed, but when faced with dire straits it can help in a pinch.
A more refined method of debt help, debt consolidation has the distinct quality of turning multiple debts into a singular debt by means of a consolidation loan. One large loan is used to pay off multiple smaller debts in order to bring them up to date. Doing so would leave only one debt: the consolidation loan. This type of debt help is desirable because it helps to eliminate many debts at a time without waiting for a settlement or negatively impacting your credit report. However, acquiring this debt will require you to have suitable credit. Many individuals who are in need of a debt consolidation loan may not even qualify for one.
Credit counseling is a less involved method of debt help that helps you understand your finances rather than actively lowering or eliminating your debt. Seeking debt help through credit counseling pairs you with a counselor who will analyze your financial situation. The counselor can answer any questions you may have about your debt and can make suggestions as to how you can regain control over you financial obligation. In some instances, a credit counselor might suggest a debt management plan for a particularly bothersome debt. A debt management plan can help you pay off a debt without worrying about late fees or interest charges. This form of debt help requires you to learn more about your debts and to have the discipline to resolve them with this knowledge.