Questions To Ask Your Debt Relief Professional
When it comes to getting professional help with debt relief, you want to be sure that you are getting the best. To do this, you should be asking your debt relief professional certain questions and finding out their knowledge on the debt relief industry.
Do I qualify for debt relief?
This should be the first question you ask your debt relief professional because if you don’t qualify for one of the many debt relief methods, then they won’t be able to help you.
There are 5 forms of debt relief outside of making monthly payments, debt consolidation, debt settlement, credit counseling, debt management and bankruptcy. Each one has its own set of qualifications that have to be met. Your debt relief specialist should know the requirements for each and will advise you on which options will be suitable for your specific debt issue.
If at any point, your debt relief specialist isn’t aware of the best option for you, you should seek further professional guidance from a different company or person.
What are my debt relief options?
Once a debt specialist determines that you do qualify for debt relief, that is when you can go ahead and start evaluating your options.
Debt consolidation is when you use a loan from a bank, credit union or lending company that to pay off all of your debts immediately that you will then have to payback, usually at a lower interest rate. This type of debt relief brings together all of your debts into one loan that you can pay off at one time.
Debt Settlement is when you go through a third party to negotiate with your creditors on a lower debt amount, or a settlement, that you will pay off through monthly installments into an escrow account.
Credit Counseling is when you go to a debt expert who will analyze and asses your personal finances in order to help improve them. They can help to lower your interest rate and any associated fees with not paying off your debt on time.
Debt Management is when a third party will step in to help you create a repayment program for your debt. You will be required to pay off the full balance of your debt with debt management, but it can also give you the opportunity of not having to pay monthly interest or any other fees.
Bankruptcy should always be your last and final resort. This option is only for those that are in serious need of financial help and have consulted a bankruptcy lawyer first. There are two forms of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 will require you liquidate your assets and property to pay for outstanding debts, while Chapter 13 will require you enter into a repayment plan setup by your creditors and lenders that is overseen by a bankruptcy court.
What is the best option for me?
Each of the debt relief option has the ability to relief any debtor of their enrolled debts as long as they complete the program. However, each option works best with a certain type of debt issue.
Make sure that your debt professional is taking into account your specific debt issue and budget.
Debt Consolidation is best for those that are just barely struggling to meet their monthly payments and have multiple debts.
Debt Settlement is best for those who aren’t able to afford the entire balance of their debt and need a lowered amount in order to start paying their debt off.
Credit Counseling is for those who only have a little bit of debt and just want to make sure they keep their finances on track and don’t fall into any bad financial practices or into more debt.
Debt Management is for those who need more time to payoff their debt and feel that a restructured repayment plan not including interest is more affordable on their budget.
Bankruptcy is a last resort and should be decided upon after careful and professional consideration. This is best for those that have a debt amount that is significantly higher than the total of their assets, property and current financial affairs. Basically you owe much more money than you actually have.
How long does the debt relief process take?
Your debt relief specialist won’t be able to give you a specific length of time but might be able to determine a point at which you should be relieved of your debt depending on the timeline of your repayment plan.
Each debt relief program has its own length of time and steps for completion. Most of them will take a couple of months to a couple of years before reaching the end.
Once you complete the program, it will then take a couple more months or years even if you file for bankruptcy, before your credit does improve.
When seeking a debt relief plan, make sure you weigh all of your options before making a final decision.
Will I be debt free at the end of a debt relief program?
A debt relief professional should let you know that all enrolled debts will be fully paid off. However, this is only true for those individuals that complete their debt relief program. Simply enrolling into the program is not enough and anyone who fails to complete their debt relief program will be held accountable for any outstanding debts.
Make sure that your debt professional makes you aware of which debts you will be relieved of once you complete their program.
Will this improve my credit score?
A debt relief professional will let you know the approximate changes you can expect to your credit score. Remember that improving a credit score is a process and will take time, just like paying off debt.
Most professionals will tell you that the length of time depends on how long it will take you to complete your debt relief program, which is true. As a result, you might not see any improvements on your credit score for a couple of years.
Once you complete your chosen debt relief program, you should check your credit score for changes and any outstanding debts that you have paid off should be immediately reported to a credit bureau (Equifax, Experian, TransUnion).
You will have to be constantly checking your credit score in order to ensure that your paid debts are being marked as paid in full and stricken from your credit report.
Can I enroll all of my debts?
Your professional will let you know which debts are eligible for which program. The type of debt relief program you choose, will determine the types of debt that you can enroll into the program. Most of them take unsecured debt in the form of credit cards and loans without collateral.
However, federal student loans are the only form of debt that can not be enrolled into any type of debt relief program.
Can I enroll in a debt relief program more than once?
Your debt relief professional will let you know your eligibility for their program and how frequently you can use them. Some of your options might limit you for a couple of years while others are open for your use whenever you need them.
Once you finish a debt relief program, a debt relief professional will let you know your options if you were to fall back into debt.