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Relief from Multiple Types of Debt, Explained

By: Michael Millington


Debt relief is a fairly common term, especially for those in debt. Most people know that there’s a way to get out of debt, but not the specifics. What most people want to know about debt relief is whether it can work for them. Most companies will want you to believe that their method of debt relief is the best. However, most people will only ever benefit from one or two types of debt relief. The best way to know what is best is to have the necessary information available. Here we will list the available methods of debt relief and a few of their attributes.

The Various Methods of Debt Relief

Debt Settlement

This can be the most helpful form of debt relief available to you. Debt settlement has the distinct ability to lower your overall debt. This is something that you can only achieve with debt settlement. With debt settlement, you would stop paying your credit providers and start depositing money in an account. Once you deposited enough money, your debt settlement specialists will negotiate your debt with your creditors.

Debt Consolidation

The act of combining your debts under one obligation is known as debt consolidation. Debt consolidation can be achieved many ways, with loans or by other means. Most of these methods would require either a preexisting relationship with the lender or a great credit score. This form of debt relief doesn’t lower the amount of money you owe. This means that if you can’t pay your debt beforehand, you won’t be able to do so after consolidation.

Credit Counseling

Credit counselors have the ability to give you the information you need to tackle your debt. The best thing about receiving counseling is the fact that it doesn’t have to cost you anything. Many credit counselors offer their services for free. You can use them to give you insight into your personal debts, their severity and how to enact debt relief. The knowledge you gain from counseling can be used to eliminate debt from your life. However, you would need to exhibit discipline to enact this form of debt relief. Because credit counseling doesn’t affect your debt directly, you could easily end up with more debt should you fail to make changes.

Bankruptcy

Bankruptcy is an extremely effective form of debt relief. Filing for chapter 7 bankruptcy can result in the immediate discharge of your unsecured debts. This absolves your obligation to pay your lenders. While this doesn’t extend to secured debts (like car or student loans), it can instantly eliminate thousands of dollars in credit card debts, hospital bills, and personal loans. Bankruptcy also has the unique problem of lowering your credit score and staying on your credit record for up to ten years. This can prevent you from applying for new credit, a car loan, an apartment, or even a new job.

Be sure to do your research if you’re looking to apply for any form of debt relief.

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